Vacancy Loss Calculator – Complete Guide for Rental and Commercial
The Vacancy Loss Calculator on MyTimeCalculator helps you estimate how much income is lost due to vacant units or under-performing rent, and how that affects effective gross income (EGI). Whether you own a single rental, manage a multifamily building or analyse commercial real estate, vacancy assumptions are a key driver in cash flow and valuation models.
This calculator supports both simple vacancy assumptions (a percentage applied to scheduled income) and more detailed analysis using actual rent collected and unit counts. You can work in either annual or monthly terms depending on how you maintain your rent roll.
1. What Is Vacancy Loss?
Vacancy loss is the difference between what a could earn if it were fully occupied at market rent and what it actually collects, due to empty units or under-rented space. In pro forma statements it is usually shown as a subtraction from scheduled gross income to arrive at effective gross income.
− Vacancy & Collection Loss
= Effective Gross Income (EGI)
Many investors assume a standard vacancy rate based on market data (for example 5% or 8%) and apply it to potential income, but for an existing you can also measure vacancy directly from rent rolls and unit counts.
2. Simple Vacancy Loss Formula
In the Simple Vacancy Loss tab, the calculator uses the standard formula:
Effective Gross Income (EGI) = Scheduled Gross Income − Vacancy Loss
For example, if your scheduled gross income is 60,000 per year and you assume a 5% vacancy rate, vacancy loss is 3,000 and EGI is 57,000 per year. Switching the calculator to monthly mode would show 5,000 per month, 250 per month of vacancy loss and 4,750 per month of EGI.
3. Economic vs Physical Vacancy
In the Advanced Analysis tab, the calculator distinguishes between twoated but different concepts:
- Economic vacancy: The percentage of potential income that is not collected, based on the gap between gross potential rent and actual rent collected.
- Physical vacancy: The percentage of units that are not occupied, based on unit counts.
Economic vacancy captures lost income from concessions, non-paying tenants and below-market rents in addition to empty units. Physical vacancy focuses strictly on occupied versus vacant units, regardless of the rent level.
4. Advanced Vacancy and EGI Calculations
The advanced tab uses the followingationships:
Economic Vacancy Rate = Economic Vacancy Loss / Gross Potential Rent
Physical Vacancy Rate = (Total Units − Occupied Units) / Total Units
Occupancy Rate = Occupied Units / Total Units
Effective Gross Income (EGI) ≈ Rent Collected
The calculator also reports vacancy loss per unit by dividing economic vacancy loss by total units, giving a simple way to compare properties of different sizes on a per-unit basis.
5. Typical Vacancy Ranges and Ratings
Acceptable vacancy levels vary by market, type and strategy, but a common rule of thumb for stabilized properties is:
- 0–5% vacancy: Very tight, often rated as excellent.
- 5–8% vacancy: Healthy and typical in many markets.
- 8–12% vacancy: On the higher side, may suggest issues or a lease-up phase.
- Above 12% vacancy: Often considered high and may require attention.
The calculator uses similar bands to label vacancy as excellent, good, average or high vacancy, based on the economic vacancy rate it computes from income figures.
6. How to Use the Vacancy Loss Calculator
- Choose a calculation period (annual or monthly) at the top. Match this to how you usually track rents and expenses.
- For quick pro forma analysis, go to the Simple Vacancy Loss tab and enter scheduled gross income and your assumed vacancy rate.
- For deeper analysis of an existing, go to the Advanced Analysis tab and enter gross potential rent, actual rent collected, total units and occupied units.
- Click the calculate or analyse button. The tool reports vacancy loss, EGI, vacancy rate, occupancy and loss per unit for the selected period.
- Use the vacancy rating and snapshot table to quickly compare different scenarios or properties, and adjust your underwriting assumptions as needed.
7. Vacancy Loss in the Income Approach
In an income-capitalization model, vacancy and collection loss is usually applied near the top of the pro forma:
- Start with gross potential rent or scheduled gross income.
- Subtract vacancy and collection loss to get effective gross income (EGI).
- Add other income, then subtract operating expenses to get net operating income (NOI).
- Apply a capitalization rate to NOI to estimate value.
Because vacancy directly affects EGI, even small changes in vacancy assumptions can move NOI and value. Modelling vacancy loss carefully with a tool like this helps you understand that sensitivity.
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Vacancy Loss Calculator FAQs
Frequently Asked Questions
Quick answers to common questions vacancy loss, economic vs physical vacancy, and how to use this calculator in rental and commercial real estate analysis.
It depends on how you track your numbers. Many investors underwrite deals using annual figures, while smaller landlords often think in monthly rent. The calculator supports both: choose “Annual” or “Monthly” at the top and then enter all income amounts in the same period. The formulas are identical; only the time scale changes.
Physical vacancy is based on units: it measures what percentage of units are not occupied. Economic vacancy is based on money: it measures the income you are not collecting compared with gross potential rent. A can have low physical vacancy but high economic vacancy if units are discounted, non-paying or significantly below market rent. The advanced tab reports both forms separately.
Typical assumptions vary by market and type, but many stabilized properties are underwritten with vacancy between 3% and 8%. Very strong, supply-constrained markets might support lower assumptions, while lease-up projects, tertiary markets or specialized properties may require higher vacancy estimates. It is usually best to look at local market data, lender guidelines and historical performance of similar properties when selecting a rate in the calculator.
In the simple tab, the vacancy rate can be interpreted broadly to include both vacancy and collection loss. In the advanced tab, economic vacancy automatically captures non-paying tenants and concessions because it is based on the difference between gross potential rent and actual rent collected, not just the number of empty units. Physical vacancy, on the other hand, focuses strictly on unit occupancy regardless of payment status.
Yes. The calculator is agnostic to type. As long as you can define gross potential rent, actual rent collected and unit or space counts, you can apply the same concepts to apartments, single-family rentals, office, retail, industrial or mixed-use properties. For commercial portfolios, you may want to treat “units” as occupied spaces or leased suites rather than individual apartments.
Vacancy loss reduces effective gross income (EGI), which in turn reduces net operating income (NOI) once operating expenses are applied. Because NOI is capitalized to estimate value, higher vacancy assumptions generally lead to lower values in an income-capitalization model. This is why it is important to model vacancy realistically using data rather than guessing a single number without context.