Vacancy Rate

Real Estate Investing
Updated Apr 2026 • Has calculator

The percentage of available rental time during which a property or unit is unoccupied and generating no rental income.

What is Vacancy Rate?

Vacancy rate measures the proportion of time a rental property sits empty. At the property level, it is calculated from actual vacant days divided by total available days. Vacancy reduces effective gross income and is a critical assumption in any real estate pro forma: a 5% vacancy allowance on $60,000 of gross rent reduces effective income by $3,000 before any expenses. The US national average residential vacancy rate runs 5–8%, though individual markets and property types vary widely. Commercial properties, short-term rentals, and single-family homes in tight markets may see vacancy near 0–2%, while low-demand markets or mismanaged properties can exceed 15–20%.

Formula

Vacancy Rate (%) = (Vacant Days / Total Days) × 100

Worked Example

Worked example — Single-Family Rental — Nashville, TN

2023

Step 1  Tenant moved out Jan 15; new tenant moved in Feb 2 → 18 vacant days
Step 2  Total year: 365 days
Step 3  Vacancy Rate = 18 / 365 × 100 = 4.93%
Step 4  → Below the 5% national average — strong market demand
Step 5  → On $36,000 gross rent: lost income = $36,000 × 4.93% = $1,775

Source: Investopedia — Vacancy Rate (2024-01-01)

Calculate Vacancy Rate

Total days the property was unrented during the period

Total calendar days measured (e.g. 365 for a full year)

Vacancy Rate

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Not investment advice.

How to Interpret Vacancy Rate

< 3
Very Low Vacancy — extremely tight rental market
3 – 8
Normal Vacancy — healthy market, meets pro forma assumptions
8 – 15
Elevated Vacancy — pricing, condition, or location issue
> 15
High Vacancy — serious concern; investigate root cause

📚 Advanced Real Estate — Complete the path

  1. BRRRR Return
  2. DSCR
  3. Vacancy Rate
  4. 50% Rule
  5. 2% Rule
Sources
  1. Investopedia — Vacancy Rate