How this number is made
A vacancy loss is the rent of the months a unit sits empty. One empty month a year is about an 8% vacancy rate. Underwriting often assumes a vacancy even when the unit is full today.
- Rent if full is the rent on a signed lease, not a wish.
- Empty months include the time to turn the unit, not only the time to find a tenant.
Formula
Loss = monthly rent × empty months. Collected = monthly rent × (12 − empty months). Vacancy rate = empty months ÷ 12.
Worked example
With the figures already in the form, rent not collected is $2,000.
Questions
Should I underwrite zero vacancy?
Only if you enjoy surprises. Turnover happens. A lender will usually insert a vacancy factor even if you do not.
Does this include unpaid rent?
No. A tenant who stays and does not pay is collection loss. Add those months to the empty count only if you want a single haircut.