Vacancy Rate.

In plain English

Vacancy rate is the percentage of a rental property's units or available rental time that sits empty and earning nothing. For a single property you can measure it as the months unrented out of the year, and for a portfolio or market it is the share of all units that are vacant. Empty time means no rent while your mortgage, taxes, and upkeep keep running, so investors build an expected vacancy rate into their projections rather than assuming a property is rented 100 percent of the time. Local market vacancy data helps you set a realistic number.

01Why it matters

Forgetting to budget for vacancy is how a deal that looks profitable on paper loses money in real life, because one empty month can wipe out a chunk of the year's profit.

02The math, step by step

A unit rents for 1,500 dollars a month, or 18,000 dollars a year if it never sits empty. If it is vacant for one month between tenants, that is one month out of twelve, an 8.3 percent vacancy rate, and you collect 16,500 dollars instead. Smart projections assume some vacancy every year rather than perfect occupancy.

03What this is NOT

04Receipts

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