How Much Is Every Empty Day Costing You? The Landlord’s Guide to Calculating Vacancy Cost
- Miles Lerner
- Nov 3
- 4 min read
Updated: 4 days ago
Introduction: The Silent Profit Killer
Net operating income (NOI) is a simple equation—income minus expenses—yet one variable quietly erodes both sides: vacancy. A single 30-day gap on a $2,000 unit can wipe out more cash than a year’s worth of minor repairs. According to RealPage Analytics, the average multifamily unit now sits vacant 34.4 days between tenants, up from 30 days pre-pandemic [1]. Add rising concession levels—**13.4 %** of new leases included incentives in late 2024 [2]—and the true cost balloons fast.
This cornerstone article will show you:
1. Every line item that rolls into vacancy cost.
2. A repeatable formula you can drop into your own spreadsheet.
3. A worked example with realistic numbers.
4. Proven moves (and purpose-built Shuk tools) to slash those days, dollars, and headaches.
Let’s turn vacancy from a mystery expense into a controllable metric.
What Is Vacancy Cost—Why It Matters
Vacancy cost is the total economic loss incurred while a rental unit is not producing market rent. It combines:
• Direct cash losses (missed rent, utilities, repairs, marketing).
• Indirect losses (staff time, concessions, opportunity cost of slow or below-market lease-ups).
Because most bank underwriting assumes 95 % occupancy or better, every additional week of downtime directly drags NOI, debt-service coverage ratios, and ultimately asset value.
The Full Cost Breakdown
1. Lost Rent
Pure missing income. Even in strong markets, the median listing takes 20–25 days to lease on Zillow [3].
2. Lease-Up Incentives
Free-rent periods, gift cards, or parking perks offered to speed absorption. Concessions averaged 8.2 % of asking rent on new leases in 2024 [2].
3. Turnover & Make-Ready Expenses
Cleaning, paint, lock changes, minor repairs. The National Apartment Association pegs the average at $3,872 per turn [4].
4. Marketing & Advertising
Listing fees, SEO, pay-per-click (PPC). Yardi data shows PPC campaigns can exceed $500 per signed lease [5].
5. Utilities & Carrying Costs
Electricity, water, trash, plus ongoing taxes, insurance, and HOA dues. A typical one-bedroom runs about $150–$200/month in utilities alone [6].
6. Administrative / Leasing Labor
Staff or your personal time for showings, screening, and paperwork. Even if you self-manage, your hours have a dollar value.
7. Opportunity Cost of Timing
Leasing in a soft winter month or accepting below-market rent locks in a lower effective rate for the next 12 months—an invisible but very real drag on returns.
How to Calculate Vacancy Cost as a Landlord
Vacancy Cost
= (Lost Rent + Lease-Up Incentives + Turnover Expenses + Marketing/Ads + Utilities & Carrying Costs + Admin/Labor) × Vacancy Days ÷ 30
Think of the parenthesis as your monthly burn rate; multiplying by vacancy days and dividing by 30 annualizes those expenses back down to the exact period your unit sits idle.
Worked Example: One 30-Day Vacancy on a $2,000 Unit
One empty month just cost 2.1 months of gross rent.
How a 30-Day Vacancy Erodes Annual Returns
In income-producing real estate, a property’s value is based on its net operating income (NOI)—not on what you paid for it, but on what it earns. Appraisers and investors rely on NOI because it captures the property’s true earning power after expenses.
A property’s capitalization rate (cap rate) represents the relationship between its income and value—for example, a 6 % cap rate means the property’s annual income equals about 6 % of its market value. When income drops, value drops in proportion to that same ratio.
Now, let's assume the same unit grosses $24,000 per year. Subtracting the $4,155 vacancy cost reduces gross income by 17.3 %. On a 6 % cap-rate property, that translates into roughly $69,000 of destroyed asset value ((4,155 ÷ 0.06)). Cutting vacancy in half would recapture over $34k of equity—reason enough to obsess over every day.
Five Proven Strategies to Minimize Vacancy Cost
1. Start Renewal Conversations at Day 270
Proactive outreach 90 days before lease-end gives you time to market the unit while the current tenant still pays rent, shrinking downtime to near zero.
2. Price to the Market, Not Last Year
Use live-listing comps and traffic data. A 3 % haircut beats a 30-day vacancy.
3. Tighten Turnover Ops
Pre-schedule cleaners, painters, and maintenance for the first business day post-move-out. Many operators finish make-ready in 3–5 days (CRI Properties benchmark) versus the industry’s 10–14.
4. Automate Marketing & Screening
Syndicate listings to major portals, allow self-booking tours, and require complete application packets up front. Faster funnel = fewer stale days.
5. Leverage Continuous Listings & Demand Forecasting
(See Shuk call-out below.)
Key Takeaways & Next Steps
• Vacancy cost isn’t just lost rent; it’s a bundle of six (or more) expenses that can equal two months of income per turn.
• Use the monthly-burn formula to quantify your own exposure.
• Focus on renewal timing, market-responsive pricing, operational speed, and data-driven marketing to cut days vacant.
• Explore Shuk’s LIT and continuous-listing features to turn insights into actual NOI.
Vacancy isn’t a mystery cost—it’s a measurable, fixable drain on NOI. Use the framework above to quantify your exposure and benchmark performance across properties. The results will make clear: every day you recover is another step toward stronger returns.
Sources
[1] RealPage Analytics: Vacant Days Climbs – 2024.
[2] Fannie Mae Multifamily Market Commentary, Dec 2024.
[3] Zillow Consumer Housing Trends Report 2024.
[4] National Apartment Association: 2023 Rental Housing Turnover Cost Survey.
[5] Yardi/RentCafe Digital Marketing Benchmark Report 2024.
[6] ApartmentList Utility Index 2024.
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