Vacancy Rate

Vacancy rate accounts for the simple fact that rentals are not occupied every single day. Tenants turn over, units sit empty between leases, and short-term rentals have unbooked nights. Expressed as a percentage of potential rent, vacancy is one of the first deductions a careful investor makes when projecting income, because using full-occupancy rent overstates returns.

A common planning assumption for long-term rentals is 5 to 10 percent, though the right figure depends on the local market, the property, and management quality. For short-term rentals the same idea is captured by the occupancy rate, which usually sits well below 100 percent. Leaving vacancy out is one of the most common ways a deal looks better on paper than in reality. Our rental property ROI playbook shows where vacancy fits alongside operating expenses and financing in a true return calculation.