Realtor · Washington state · Member since 2026 · 10 posts · 2 votes
Something I keep seeing in deal analysis threads: everyone plugs in 5% or 8% vacancy because that's what the calculator defaults to. But that's a percentage, and what actually hurts is how many days a unit sits empty between tenants.
So I try to think in days, not percent. Turnover time is basically cleaning and repairs, then marketing, then screening, then the new tenant's notice at their old place. Each of those can stretch longer than people expect. My buddy has been trying to rent his place in Bothell WA for MONTHS and no renter.. He has a very nice townhome in one of the most desirable cities in Washington State. He has been lowering his rents to no success. So keep this one in mind..
My rule is pretty simple:
- Look at how long similar rentals near me actually sit before they go pending - Add the time I'd need to turn the unit and screen someone - Run the deal with that many empty days every lease, not a flat percentage
If the deal falls apart with an extra month empty, I treat the thin cash flow as a risk, not a margin.
The vacancy rate can be converted to days. 5% of 365 is 18.25 days. The percentage is used when running numbers. If a property can be rented for $10,000 per year and the vacancy rate is 5%, the actual rent collected would be $9,500.
Use days, not a flat percent. I underwrite 30 days vacant, which is about 8% (30/365), and 14 days is about 4%. The tradeoff is a low vacanncy number makes a weak deal look good, and a high one kills a good deal. Match it to the actual turnover and lease-up time for that property type. Hope this helps!
Using days IS using a percent, just divide by 365. Otherwise you’re diving rent by 365 and then multiplying by days. Why add an extra step?
Your buddy with months of vacancy is an example of “saving money by not using a PM.” Not counting hidden costs. (At least I hope he’s not using a PM. If he is, then he’s an example of losses because being loyal or not shopping around.). A LONG vacancy should be 2-3 weeks. That’s happened to me twice in 30 years with a dozen properties. It’s never taken a month, not even with a trashed property. That’s an upside of using a PM. It’s made ready in 5-7 days while being advertised with previous pix which are updated when ready. By then someone’s usually approved and preparing to move in within 7-10 days.)
He’s paid more than 16% in lost rent if by months you mean just 2. It comes down to price/advertising. If he’s solo it’s his fault. If he’s using a PM they don’t seem to have a clue.
It's also going to be based on the type of property and tenant. If you're renting SFR to families like me you can expect a vacancy every 4-8 years. That means a vacancy rate of 0.6-1.2%, call it 1%. I don't use days as it will be zero most years and 14-21 days the "bad year". If you're renting out studio/1bedroom apartments with a transient tenant you could easily hit 4-8%.
TLDR: Percents work better/easier for calculations. If you want to reduce vacancy percent. Property type is the most important, turnover and screening are tied for second. A vacancy longer than a month better be a once in 10+ years event. Vacancy should be one of the least important “expenses” and barely worth worrying about. Take a deep dive in to anything exceeding 8%. Good luck and carry on. You’re probably only looking at the people doing better than you. Take a minute to realize how well you’re doing.