How to Calculate Vacancy Rate for a Rental Property? [Infographic]

What is Vacancy Rate?

The vacancy rate denotes the percentage of vacant or idle units in a rental property. Typically, a low vacancy rate indicates that more people are renting a particular property. In contrast, a high vacancy rate suggests a lack of interest from people to rent in certain areas or property.

Vacancy rates are a crucial measure for landlords, property owners, and real estate investors to analyze the market conditions and benchmark properties within an area or a region.

According to the U.S. Census Bureau, the average vacancy rate for rental properties in Q3 '20 is 6.4%.

This percentage varies from state to state and within neighborhoods. The rental vacancy rate for metropolitan areas generally ranges between 2% to 4%.

Average Vacancy Rates based on Property Types

Short-Term Rentals: Since they are rented for a short period, they have a high average vacancy rate of around 30%.
Vacation Rental Properties: Rental properties have the highest vacancy rate of around 45% due to seasonal demand.
Multifamily Properties: These properties usually consist of three to five units and have an average vacancy rate of 5.5%.
Single-Family Properties: These properties can be occupied by only one family and consist of one unit. The average vacancy rates for single-family properties are around 5%.
Apartment Buildings: They have the least vacancy rate of 4.7% and consist of more than five units.

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How to Calculate Rental Vacancy Rate?

Here is how you can calculate the rental vacancy rate for your properties:

Vacancy Rate = Total Number of Vacant Units / Total Number of Units

For example, if an apartment complex consists of 20 units of which 5 units remain unoccupied, then it’s vacancy rate will be:

5/20 = 0.25

0.25 x 100 = 25% vacancy rate

Let’s say the average rental vacancy rate of that area is 10%; then it means your property isn’t doing well since its vacancy rate is higher than that of the area. As a property owner, you should analyze the factors causing this issue and take concrete steps to reduce your vacancy rates.

You can also calculate your occupancy rate from vacancy rates. The occupancy rate is simply the opposite of the vacancy rate. It tells you the number of units that are occupied. From our previous example, the apartment complex’s occupancy rate will be 75%.

10 Tips for Property Managers to Minimize Vacancy Rates [Infographic]

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A low rental vacancy rate is a positive sign for any landlord or property owner. However, if you are struggling with high vacancy rates, then here are ten easy tips that will help you reduce your vacancy rates: