Rental Vacancy Allowance Calculator
Vacancy allowance budgets for empty months in rental property analysis. Investors typically assume 5-7% on prospectuses but real numbers are higher: urban Class A 4-5%, suburban 5-7%, urban Class C 10-15%. Underestimating kills NOI projections.
Realistic Vacancy By Class
Class A urban (luxury, 5-year-old or newer): 3-5%. Class B suburban (1980s-2000s well-maintained): 5-7%. Class C older or low-income: 8-15%. Tertiary markets with population decline: 12-20%. Pro forma assumption of 5% across all asset classes is the most common underwriting error.
Market Tier Adjustment
Hot markets (NYC, SF, Austin, Miami): subtract 1-2% from base. Average markets (most US cities): use base. Soft markets (Detroit, Cleveland, St. Louis): add 2-3%. Population growth + job growth + new construction restraint = lower vacancy.
Hidden Vacancy Costs
Beyond lost rent: turnover costs (clean + paint + repair + advertising) average $1,500-$3,000 per unit. Tenant placement fee 50-100% of one month rent if using property manager. Concessions (one month free) to fill quickly. Total turnover cost can equal 1.5-2 months of lost rent.
Source: CBRE Multifamily Vacancy Report 2025, Apartment List Vacancy Index 2025. Last updated: May 2026.