Updated almost 13 years ago on . Most recent reply
Vacancy Rate & Cap Rate Calculation
How many months rent do you guys deduct from gross rental income when determining your cap rate? In other words what is your vacancy rate?
I am currently deducting two months rent for 1980s, 3/2 townhomes, in a middle class area with great schools. Is that too much?
My thinking is if you used a realtor to find a tenant they would take one month. And if it took one month to find and collect rent, you'd be out another month.
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Bill Gulley
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Bill Gulley#3 Guru, Book, & Course Reviews Contributor
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In a conservative pro forma income statement, use 10%, that's basicaly 5 weeks in a year. :)