Vacancy rate for rentals: what to assume in 2026 (and why 5% is usually a guess)

What vacancy actually measures (it's not just empty units)

Physical vacancy is the obvious one: days the unit sits empty between tenants, as a share of the year. One month empty out of twelve is 8.3%.

Economic vacancy is the number that matters: every dollar of scheduled rent you didn't collect. It includes empty days, plus three categories most underwrites skip:

• Concessions. "First month free" on a 12-month lease is 8.3% economic vacancy on a unit that was never physically vacant for a day of the lease.
• Non-payment and evictions. A tenant who stops paying in month 8 and leaves after a 90-day eviction process produces ~25% economic vacancy for that year — while the unit shows as occupied the whole time.
• Loss-to-lease. A long-term tenant paying $1,150 against a $1,300 market rent is ~11.5% below scheduled market income. Sellers love to advertise the market rent and the full-occupancy history in the same flyer.

This is why a C-class building can truthfully report 3% physical vacancy and still be missing 12% of its scheduled income. When you read a seller's package, this gap is one of the eight standard tricks covered in how to read a rental property pro forma. Underwrite on economic vacancy. It's the version that pays the mortgage.

The turnover math: derive the number, don't pick it

A defensible vacancy assumption is just two estimates multiplied together:

Vacancy rate ≈ days vacant per turnover ÷ (average tenancy in days + days vacant)

Run the realistic scenarios:

• Good operator, 2-year average tenancy, 30 days to turn and re-lease: 30 ÷ 760 ≈ 4%
• Same property, 1-year tenancies: 30 ÷ 395 ≈ 7.6%
• C-class, annual turnover, 45 days to turn (more repairs, slower lease-up): 45 ÷ 410 ≈ 11%
• Student rental on a strict August calendar: model an explicit turn and lease-up gap based on the property's academic calendar and leasing history; one empty month would equal 8.3%, but it is not a universal floor

Notice what drives the result: tenancy length, far more than days-on-market. Cutting re-lease time from 30 days to 20 saves you about a point on two-year tenancies (3.9% to 2.7%) and more than two points on annual turnover (7.6% to 5.2%); getting tenants to stay a second year cuts vacancy nearly in half. That asymmetry should shape how you operate — and it's the real reason renewals beat rent maximization for most small landlords. The vacancy rate calculator converts vacant days and turnover cost into an annual vacancy rate.

What 5 points of vacancy does to a real deal

A $300,000 duplex, $1,400/unit, 25% down, $225,000 loan at 7% over 30 years (P&I ≈ $1,497/month). Monthly operating expenses before vacancy: $300 taxes, $125 insurance, 10% maintenance/capex ($280), 8% property management ($224).

• At 5% vacancy ($140/mo): NOI ≈ $20,772/year, cap rate 6.9%, cash flow ≈ $234/month, DSCR (NOI ÷ debt service) ≈ 1.16
• At 10% vacancy ($280/mo): NOI ≈ $19,092/year, cap rate 6.4%, cash flow ≈ $94/month, DSCR ≈ 1.06

Five points of vacancy — the gap between "copied a guru default" and "C-class with annual turnover" — cut this deal's cash flow by 60% and dropped DSCR from acceptable to fragile. Each percentage point of vacancy costs this deal $28 a month of cash flow. That's the entire argument for spending ten minutes on this line instead of zero.

And the duplex math has a wrinkle a single-family doesn't: vacancy arrives in 50% chunks. A "7% vacancy year" on a duplex is roughly one unit empty for seven weeks — about $2,300 of missing rent concentrated in two months, not about $196 missing evenly every month. Hold reserves accordingly. Stress-test your own numbers in the free TrueCap analyzer at both your base case and base-plus-five.

The DSCR loan wrinkle: your lender's formula may ignore vacancy

Here's the part that surprises investors using DSCR loans: some programs divide rent by PITIA, while others apply different adjustments; ask for the exact written formula, accepted rent evidence, threshold, and full eligibility rules.

On the duplex above: $2,800 gross rent against roughly $1,922 of PITIA is 1.46 under that illustrative formula. But your own NOI-based coverage at 10% economic vacancy was 1.06. The operating scenario has much less coverage after expenses. The gap between those two formulas is risk to investigate; neither number guarantees approval or future collections. Run both versions in the TrueCap analyzer before you treat an approval as validation of the deal.

Sanity checks by property class (not answers)

• A-class, stable metro: long tenancies and fast lease-up; a two-year average stay with 30 days to re-lease works out to about 4% by the formula above.
• B-class workforce housing: the bread and butter of small-portfolio investing; derive it from the property's own lease history and turn times rather than a class average.
• C-class: model economic vacancy; annual turnover with a 45-day turn is already about 11% by the formula above, before non-payment.
• Student rentals: derive turnover and summer lease-up assumptions from the property's calendar and history; do not impose a universal 8.3% floor.

The Census Bureau's national rental vacancy figure was 7.3% in the second quarter of 2026, after running 6.3-7.2% from 2023 through 2025, but national averages blend markets that have nothing to do with each other: in that same quarter, 13 of the 75 largest metros were under 4% and 15 were over 10%. The better calibration source is free: call two local property managers and ask their average days-on-market and renewal rate for your property type. They know the real number because they live in it — and the same conversation helps you decide whether hiring a PM pencils at all.

Where to find the real number before you buy

For an occupied property, the truth is in the paperwork — ask for it during due diligence and read it like an auditor:

• The 12-month ledger, not the rent roll. A rent roll is a snapshot of scheduled rent on one day. The ledger shows what was actually collected, month by month. Sum the collections, divide by scheduled rent × 12 — the difference is the property's real economic vacancy, including every late month and concession the listing didn't mention.
• Lease start dates. Three tenants who all started within the last 8 months is a turnover pattern, not a coincidence. Ask what happened to the previous tenants.
• Days-on-market for comparable listings. Pull current rental listings in the same zip and note how long they've been sitting. Thirty-plus days across the comps means your 2-week lease-up assumption is fantasy.
• Two phone calls to local PMs. Ask their average days-to-lease and renewal rate for your property type and street, not the metro. Ten minutes, free, and more accurate than any national dataset.

One common modeling mistake: double-counting (or zero-counting)

Vacancy is an income-side adjustment — it reduces collected rent before operating expenses. Two errors show up constantly in homemade spreadsheets. First, investors using the 50% rule sometimes apply the 50% to gross rent and subtract vacancy separately — but the classic 50% heuristic already includes vacancy, so they've counted it twice and killed a deal that pencils. Second, and worse, investors itemizing expenses (taxes, insurance, maintenance, PM) forget the vacancy line entirely because it isn't a bill anyone sends you — there's no invoice for an empty month. Pick one structure: either the heuristic with vacancy baked in for triage, or itemized expenses with an explicit vacancy percentage for the real underwrite. Never both, never neither.

How operators actually push vacancy down

Test price against current comps and lease-up evidence. A lower asking rent can reduce lease-up time in some cases, but the relationship and renewal outcome are property- and market-specific. Compare multiple rent and downtime scenarios rather than prescribing a fixed discount.

Plan lawful renewal outreach early. Timing, notice, rent-change, screening, and lease rules vary. Compare the verified renewal offer with expected re-lease rent, downtime, turn cost, and tenant-specific collection risk; neither path wins almost every case.

Pre-lease during the notice period. Showing the unit in the last 30 days of a tenancy and turning it in under a week converts a 30-day vacancy into a 5-day one, worth about six points of vacancy rate on annual-turnover properties (30 ÷ 395 ≈ 7.6% vs 5 ÷ 370 ≈ 1.4%).

Screen for tenure, not just credit. A 680-score applicant with five years at their last address may present a different turnover profile from a 740 who moves every year. Apply lawful, written, consistently administered screening criteria; neither a score nor address history guarantees payment or renewal.