The true cost of Vacancy

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The true cost of Vacancy

David Spurlock
Real Estate Agent · OH · Member since 2022 · 83 posts · 25 votes

While running my own numbers, I realized I was only factoring in a loss of rent for vacancy costs. Here in Columbus, service providers charge a service fee, usually around $30-$50 per gas & electric, even if you don't use any power. Add that on top of marketing costs ($100 per month), and you're looking at $160-$200 extra expenses each month on top of losss of rent. I was originally holding out to try and get a certain rent price, but realized I would save more in the long term by lowering it. I'm curious what other costs you all factor in that maybe I've missed?

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Patrick O'SullivanBusiness Member
Property Manager · Phoenix, AZ · Member since 2024 · 548 posts · 210 votes
3d

One cost that often gets missed is insurance. Many landlord policies limit coverage once a property has been vacant for a while, so check your policy’s vacancy clause. You’ll also need to keep the heat on to protect the pipes. Add lawn care or snow removal, owner-paid water and trash, and the time spent on showings, and it adds up quickly. On lowering the rent, keep in mind a lower starting rent carries into future renewals. A small drop is often the better trade, but a big one can cost more over time than the vacancy it saved.

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  • Patrick O'SullivanBusiness Member
    Property Manager · Phoenix, AZ · Member since 2024 · 548 posts · 210 votes
    3d

    One cost that often gets missed is insurance. Many landlord policies limit coverage once a property has been vacant for a while, so check your policy’s vacancy clause. You’ll also need to keep the heat on to protect the pipes. Add lawn care or snow removal, owner-paid water and trash, and the time spent on showings, and it adds up quickly. On lowering the rent, keep in mind a lower starting rent carries into future renewals. A small drop is often the better trade, but a big one can cost more over time than the vacancy it saved.

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    • David Spurlock
      OP
      Real Estate Agent · OH · Member since 2022 · 83 posts · 25 votes
      20h

      That's interesting about the insurance and vacant properties. I'll have to see what mine does.

      0Reply
    • Patrick O'SullivanBusiness Member
      Property Manager · Phoenix, AZ · Member since 2024 · 548 posts · 210 votes
      15h

      Yeah, definitely worth looking into. It’s one of those things you don’t really think about until a property sits vacant longer than expected. Better to know what your policy covers ahead of time.

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  • Matthew Tregoning
    Property Manager · Melbourne, FL · Member since 2019 · 394 posts · 163 votes
    3d

    One easy-to-miss cost is the extra work created by a longer vacancy: weekly property checks, keeping utilities active, and fixing small issues before they become visible during a showing. I’d compare the cost of a modest rent adjustment with the full carrying cost per vacant day, then set a date to reassess instead of holding out indefinitely.

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  • Denise SuppleeBusiness Member
    Realtor · Willow Grove, PA · Member since 2017 · 1k+ posts · 652 votes
    3d

    You're right, vacancy costs more than just the rent you're not collecting. You still have utilities, insurance, taxes, maintenance and other expenses while the property is sitting empty. Then there are the costs to get it ready and find the next tenant.

    I wouldn't let a property sit vacant too long trying to get that extra $100 in rent. Sometimes getting a good tenant in a little sooner saves you more money in the long run.

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    • David Spurlock
      OP
      Real Estate Agent · OH · Member since 2022 · 83 posts · 25 votes
      21h

      I wouldn't factor Taxes, Insurance, or Maintenance into vacancy costs, as you'll still have all three when it's occupied. But I agree, a better tenant at a lower price is best.

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    • David Spurlock
      OP
      Real Estate Agent · OH · Member since 2022 · 83 posts · 25 votes
      20h

      I realized I was thinking about it from a pro forma stance, whereas you're thinking of it from a management stance. You're absolutely right to factor that in

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  • Richard (Ryszard) Cieplechowicz
    Member since 2026 · 143 posts · 38 votes
    3d

    Good catch on the utility fees. Another cost people forget is turnover paint and cleaning after a longer vacancy, since a house that sat empty often needs more than a normal turn.

    I would set a date at the start, say 30 days, and drop the rent a small amount if there are no good applications by then. Track the actual carrying cost per vacant day so the decision is math and not hope.

    1Reply
    • David Spurlock
      OP
      Real Estate Agent · OH · Member since 2022 · 83 posts · 25 votes
      20h

      Love that! Math over hope

      0Reply
  • Ametria Chaney
    Realtor · Memphis, Shelby County · Member since 2026 · 89 posts · 27 votes
    2d

    David, love this framing — vacancy is the silent deal-killer because it never shows up in the listing. Beyond lost rent, I'd add three costs investors routinely miss: the re-lease cost (make-ready, marketing, leasing fee or your time), the "stale listing" discount (a unit sitting 30+ days usually rents below market), and the maintenance snowball (small issues compound in an empty unit). On the acquisition side, this is exactly why I underwrite every rental with a realistic vacancy reserve instead of assuming full occupancy — the deal that only works at 100% occupancy doesn't work. A property with chronic turnover is often a pricing or condition problem wearing a vacancy costume. What's the average days-vacant you're seeing in your market?

    0Reply
    • David Spurlock
      OP
      Real Estate Agent · OH · Member since 2022 · 83 posts · 25 votes
      20h

      Get this Ai Slop outta here lol

      0Reply
  • Rachel Mazzanti
    Virtual Assistant · Remote · Member since 2020 · 114 posts · 49 votes
    2d

    You're already ahead of most investors just by counting the holding costs. The two I'd add: mortgage interest, taxes, and insurance still accrue while the unit sits empty, and leasing fees, usually half to a full month of rent if you use an agent.

    The practical fix on my company's client files: code every vacancy-related dollar to its own turnover category instead of burying it in repairs or utilities. At year end you can divide total turnover spend by number of turns and you finally know what a vacancy actually costs per unit. Most people guess half of the real number.

    And your instinct on the rent is the right math. Holding out two extra months for $50 more a month gains you $600 a year and costs you roughly $3,400 in lost rent and carrying costs. Almost every investor who runs that number once stops haggling over small rent differences.

    0Reply
    • David Spurlock
      OP
      Real Estate Agent · OH · Member since 2022 · 83 posts · 25 votes
      20h

      Dang, every reply is just going to be Ai now, isn't it?

      0Reply
  • Jim Johnson
    Real Estate Agent · Memphis · Member since 2026 · 593 posts · 349 votes
    2d

    Lawn care, cleaning, and extra trips to check on the property are a few that can get overlooked. Depending on the season, there's also the cost of keeping the heat or AC running while it's vacant. And if you're paying someone to handle showings, that adds up too. Your point about lowering the rent is worth considering, especially when another month of vacancy could cost more than the difference in rent you'd collect.

    1Reply
  • Divin KanyamaBusiness Member
    Accountant · Seattle, WA · Member since 2025 · 525 posts · 222 votes
    2d

    That’s a great observation, @David Spurlock. Vacancy is really a combination of lost rent, carrying costs, and turnover expenses, so lowering the asking rent can be the better financial decision when the alternative is another month empty.

    Other costs I’d include are cleaning, repairs and paint, lock changes, lawn or snow service, water and trash, leasing commissions, screening fees, concessions, inspection or permit costs, and management or administrative time. I’d also account for bad debt, collection costs, and the possibility that a turn takes longer than planned.

    A useful approach is to calculate the daily cost of vacancy and compare it with the annual impact of a modest rent reduction. That makes it easier to decide whether holding out for a higher rent is actually worthwhile.

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  • Willson Dinayen
    Investor · Member since 2026 · 22 posts · 10 votes
    2d

    @David Spurlock — you're asking the right question, and Patrick's point about the vacancy clause in landlord policies is a big one. A few costs I'd add to your list:

    1. Turnover repairs, amortized. Between paint touch-ups, cleaning, carpet service, and small fixes, most turns run a few hundred dollars. If a unit turns once a year and the turn costs $600, that's effectively another $50/month of cost attached to every vacancy.

    2. Your time. Showings, coordinating access, screening applications, lease paperwork. An extra month of vacancy is easily 10–15 hours of your life you don't get back.

    3. Seasonality risk. The subtle one: the longer a unit sits, the further it slides into the slow rental season, and the bigger the concession you'll eventually need to fill it. A vacancy in October that you "wait out" can cost more than the rent you were protecting.

    On your rent-price dilemma, here's a simple way to make the math explicit: add up your true monthly holding cost — lost rent, utilities, insurance, marketing, amortized turn costs, your time. Now compare that to the concession. One more month of vacancy costs you all of that, in full. A $50/month reduction on a 12-month lease only costs you $600 over the year. If your holding cost is $1,500+ per month, risking $1,500 to protect $600 is a bad trade.

    The guardrail is Patrick's: keep the cut small and justifiable. A $25–$50 trim to get it leased this month almost always beats another month of holding costs. A $150 cut usually doesn't — that one sticks with you through every renewal.

    1Reply
  • Clever Mukori
    Member since 2026 · 21 posts · 7 votes
    1d

    The math that helped me: add up a month of mortgage, taxes, insurance, utilities and lawn care, then divide by 30 to get what each empty day costs you. Then compare that to the extra rent you're holding out for. Holding out for $100 more a month on a 12-month lease is $1,200 a year, so if an empty day costs you $60, you break even at about 20 extra vacant days, and past that the lower rent wins. Other easy-to-miss ones are listing or leasing fees, rekeying between tenants, and HOA or city fines if the yard slips while nobody's living there.

    0Reply
  • Leo SteinBusiness Member
    Property Manager · Orange County, CA · Member since 2025 · 156 posts · 36 votes
    1d

    David, good catch on carrying costs. Beyond the lost rent, utilities and marketing, I'd add the items people usually forget: turn cost that comes from the vacancy itself (paint touch-ups, cleaning, lawn or landscaping so the place shows well), lockbox or rekey costs, and any HOA or insurance clauses that change when a unit sits empty beyond 30 days. Those add up quietly.

    The other number I track is days vacant by price drop. On a typical unit I'd rather take a smaller rent concession in the first two weeks than hold out, because each extra week empty costs a full week of rent plus those fixed costs. You're right that lowering the price often wins.

    Also price the vacancy against the lease term. A slightly lower rent on a 12 to 15 month lease that avoids another turn can beat a higher rent that churns. Keep a simple sheet of days on market per property and you'll see which units are priced wrong fast.

    Happy to compare notes by message.

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  • Mike FisherBusiness Member
    New Lenox, IL · Member since 2024 · 118 posts · 64 votes
    1d

    David, the replies above cover the dollar side well, so here is one cost nobody has mentioned yet: who an overpriced listing attracts.

    When a unit sits 5 to 10 percent above the comps, applicants with good credit and steady income usually know the market and skip it. The ones who keep calling are often people who have been turned down elsewhere and are hoping you will bend on screening because the place has been sitting. The longer you hold out, the more pressure there is to approve someone you would have passed on in week one, and that tenant can cost far more than a month of vacancy.

    Two things we watch on rentals in the south and southwest Chicago suburbs:

    1. Price it at the comps on day one instead of starting high and chasing it down. The first two weeks of a listing get the most attention, and that is when your best applicants are looking.

    2. Read the applicant pool, not just the inquiry count. Plenty of showings but nobody who passes screening is a pricing signal, not a marketing one.

    And keep the screening standard fixed no matter how long it sits. Adjust the price, never the bar.

    I have been doing this personally since 1991, and pricing high and waiting is still one of the more expensive mistakes I see owners make.

    Mike, M Property Group LLC

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  • Daniel Jung
    Member since 2026 · 43 posts · 17 votes
    1d

    One piece I would add: a lot of the cost is set before the unit is even empty, so track two numbers separately — days to get the unit lease-ready after move-out, and days on the market once listed. The first one is in your control, and it is where days disappear.

    What helps is treating the turn like a schedule, not a scramble. Walk the unit before move-out and note the work, book the cleaner and any trades for the day after keys come back, and start showings to pre-approved applicants while the current tenant is still in place, where your lease allows it.

    On renewals, start the conversation early with a modest increase already on the table. A tenant who renews, even flat, saves the whole turn, the marketing, and the empty days — which is why the cheapest vacancy is the one that never happens.

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