InvestingAll terms starting with V
Vacancy rate
The share of time or units sitting empty, budgeted as a reduction to expected rental income.
Vacancy covers turnover between tenants and time on market. Projections that assume full occupancy every month overstate income, because turnover is a normal cost of owning rentals.
Days vacant are usually more expensive than a modest rent concession to retain a good tenant, because an empty unit earns nothing while every fixed cost continues.
Related terms
- Cash flowWhat remains each month after rent has covered operating expenses and debt service.
- NOI (Net Operating Income)Income after operating expenses but before debt service, taxes on income, and capital expenditures.
- TurnoverThe work and vacancy between one tenancy and the next: cleaning, repairs, marketing, and re-leasing.
- Operating expensesThe recurring costs of running a property: taxes, insurance, management, maintenance, and owner-paid utilities.
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