Vacancy Cost

It is how much money empty units cost you — rent you did not collect because nobody was paying.

Formal definition

Vacancy cost estimates the dollar loss from unrented unit-days, typically calculated as scheduled rent multiplied by the vacancy rate or vacant days expressed as a share of the period.

Why it matters

Vacancy shows up in NOI and DSCR; even short gaps between tenants add up across a portfolio.

Where you see it

• Property management owner statements
• Multifamily underwriting pro formas
• Real estate investor meetups
• HUD and lender occupancy certifications
• Portfolio cash-flow spreadsheets

Worked example

1. Scheduled monthly rent:
2. Economic vacancy: 5%.
3. Vacancy cost ≈
4. Interpretation: Empty units cost about $600 in lost rent this month.

How Business metrics calculates it

(Vacant days ÷ 30) × Monthly rent.

Where people fool themselves

Vacancy cost using market rent on a unit that is unrentable until you replace the floor is not a leasing problem yet. Finish the unit, then count days.

Run it on your own numbers: the Residential Rental calculator.