How to model vacancy
Three checks before you settle on a vacancy assumption:
- Include turnover cost. At $1,500 a month, a 14-day vacancy with $400 of cleaning and paint costs as much as about 22 vacant days. Counting only the vacant days leaves that out.
- Match the property. Vacancy varies by property, lease terms, submarket, season and management. A national or metro figure is a starting point, not the number for one building.
- Verify with a local PM. Ask a property manager for 12-month historical vacancy on comparable units in your submarket, and use it in place of the figure in a seller's pro forma.
Vacancy is part of your effective gross income calculation, which feeds into NOI and cap rate. On a property whose annual rent is 12% of its price, understating vacancy by 3 points overstates the cap rate by about a third of a point.
Where your vacancy number goes next
Frequently asked questions
What is a good vacancy rate for rental property?
The Census Bureau's Housing Vacancy Survey put the national rental vacancy rate at 7.3% in the second quarter of 2026. That is one national figure, not a target for a single property. This calculator grades its result against fixed rule-of-thumb bands, not market data: under 5% reads "Aggressive (low)", 5% to under 8% "Realistic", 8% to under 12% "Conservative", and 12% or more "Distressed". TrueCap's analyzer starts at 5% vacancy as an editable default; replace it with recent vacancy on comparable units in your submarket.
How do you calculate vacancy rate?
Vacancy rate = (annual vacancy loss ÷ annual gross potential rent) × 100. Annual vacancy loss = (vacant days × daily rent) + turnover costs (cleaning, repairs, listing fees). The calculator above does this math automatically.
What's included in vacancy loss?
Two components: (1) lost rent during the actual vacant days between tenants, and (2) turnover cost: cleaning, paint touch-up, minor repairs, listing fees, and any lease-up fee a property manager charges. Leaving turnover cost out understates the effective rate.
How much does the vacancy assumption change the numbers?
On a rental with $20,000 of annual gross rent, moving the vacancy assumption from 8% to 5% adds $600 a year of modeled income. If nothing else changes, that is $600 of NOI, and at a 7% cap rate about $8,600 of value. Re-run any pro forma with your own vacancy assumption.
Does vacancy rate vary by market?
Yes. Vacancy varies by property, lease terms, submarket, season and management, so a national figure is not a local one. Ask a local property manager for 12-month historical vacancy on comparable units in your submarket, and use that.