December 18, 2024•2 min read
Vacancy Rate: The Silent Profit Killer in Real Estate Investing
RentalIntel Team
Real Estate Investment Experts
Vacancy is the #1 cash flow killer in real estate.
The Vacancy Rate tells you how often your property is empty—and losing money.
The Formula
For single-family homes, use:
Where:
- Vacant Units = Number of unoccupied rentals
- Total Units = Number of total available units
Real-Life Example
Multi-Unit Property
| Category | Amount |
|---|---|
| Total Units | 10 |
| Vacant Units | 2 |
Vacancy Rate Calculation
Single-Family Home Example
| Category | Amount |
|---|---|
| Days Vacant | 15 |
| Total Days in Year | 365 |
Vacancy Rate Calculation
What Does a 20% Vacancy Rate Mean?
- High vacancy = Losing potential rental income.
- Low vacancy = Strong market demand.
- Most healthy rentals aim for under 5-8% vacancy.
When Vacancy Rate Matters (and When It Doesn’t)
✅ Critical for rental investors
✅ Helps predict long-term cash flow
❌ Doesn’t apply to owner-occupied homes
❌ STRs should use occupancy rate instead
Pro Tips
- Reduce vacancy with longer leases (e.g., 12+ months).
- Offer move-in incentives (discounted first month) in slow seasons.
- Screen tenants well to avoid turnover & extended vacancies.
The Bottom Line
A high Vacancy Rate = money left on the table.
Keep it low by pricing competitively, retaining tenants, and marketing smartly.
What’s the average vacancy rate in your market? Let’s discuss!
