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Vacancy Rate Formula:
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Vacancy rate is a key metric in real estate that measures the percentage of all available units in a rental property that are vacant or unoccupied at a specific time. It's an important indicator of the health of a rental property and the local rental market.
The calculator uses the vacancy rate formula:
Where:
Explanation: The formula calculates what percentage of the total available units are currently vacant, providing a clear measure of occupancy performance.
Details: Vacancy rate is crucial for property managers and real estate investors to assess property performance, make pricing decisions, and evaluate market conditions. A high vacancy rate may indicate pricing issues or market oversaturation, while a very low rate might suggest pricing below market value.
Tips: Enter the number of vacant units and total units in the property. Both values must be valid (vacant units ≥ 0, total units > 0, and vacant units cannot exceed total units).
Q1: What is a good vacancy rate for rental properties?
A: Typically, a vacancy rate of 2-7% is considered healthy, depending on the market. Rates below 2% may indicate underpricing, while rates above 7% may signal problems with the property or market conditions.
Q2: How often should vacancy rate be calculated?
A: Most property managers calculate vacancy rate monthly to track performance trends and make timely adjustments to marketing or pricing strategies.
Q3: Does vacancy rate include units under renovation?
A: Typically yes - any unit that is not producing rental income and is not occupied should be counted as vacant, including units being renovated or repaired.
Q4: How does vacancy rate affect property valuation?
A: Higher vacancy rates generally decrease property valuation as they indicate lower income potential and higher risk for potential investors or lenders.
Q5: What's the difference between physical and economic vacancy?
A: Physical vacancy counts unoccupied units, while economic vacancy also includes units that are occupied but not paying full rent (due to discounts, concessions, or non-payment).