Operating expenses
Vacancy Reserve
Reserve for months without a paying tenant. Typically 5–8% of gross rent, depending on the market.
Why Vacancy Reserve matters
Vacancy is the most-under-budgeted line item in new-investor underwrites. Real vacancy is 6-10% in most markets, NOT the 3% the listing pro-forma shows. Even a single 30-day turnover = 8.3% vacancy for that year.
How to check Vacancy Reserve before you rely on it
Look for evidence instead of a default percentage. Ask the seller for the rent roll and the lease history for the last two years, count the months without a paying tenant, and ask a local property manager how long a unit at this rent takes to lease. Then include turnover costs in your estimate: cleaning, repairs, and the leasing fee arrive with every vacancy. Rerun the analysis with one extra month of vacancy each year to see whether the deal still clears.
Related terms
Ready to run the Vacancy Reserve math on a real deal?
Free 60-second analysis with labeled starting assumptions and no signup. Pro calculates your Offer Ceiling: the highest price that still meets your targets under the assumptions shown.
Where Vacancy Reserve shows up in TrueCap
Operating expenses are line items in the analyzer's expense section, each labeled with its source — a HUD or FRED benchmark, a TrueCap default you can replace, or your own number. Property tax is always your local figure. Together they produce NOI and cash flow after reserves, and the results view shows how much each one moves the decision.