What Is Vacancy Rate? A Landlord’s Guide With Formula
What is vacancy rate? Learn the formula, what counts as a good benchmark by region, and how landlords calculate and lower vacancy on a property.
An empty unit does not just sit there quietly. It costs money every single day nobody is paying rent on it, and most landlords do not have a clean way to put a number on exactly how much. That number is vacancy rate, and it is one of the simplest, most useful metrics in rental property management.
Quick Answer
Vacancy rate is the percentage of your rental units, or the percentage of time a single unit sits empty, that is not generating rent over a given period. The basic formula is (vacant units ÷ total units) × 100, or (vacant days ÷ total days) × 100 for a single property. The national rental vacancy rate sits at 7.3% as of Q2 2026, but what counts as “good” depends heavily on your market and property type. Landlords track vacancy rate because it is one of the fastest, clearest signals that pricing, condition, or marketing needs attention.
What Is Vacancy Rate, Exactly?
Vacancy rate measures how much of your rental inventory, or how much of your rental time, is sitting unoccupied instead of producing income. It shows up in two related ways.
Physical vacancy rate is the straightforward version: the share of units that are empty and available to rent right now. If you own 10 units and 2 are empty, your physical vacancy rate is 20%.
Economic vacancy rate is a step further. It captures not just empty units, but occupied units that are not producing full rent, whether from concessions, non-paying tenants, or units rented below market. A property can look fully occupied and still have real economic vacancy if the rent roll does not match the rent it should be collecting.
Working with independent landlords managing everything from a single duplex to growing portfolios, we hear vacancy come up as one of the first numbers people ask about. It is easy to see why. Unlike a rent increase that phases in gradually, an empty unit is a complete loss of income on that unit until it is filled again, and every day it sits empty is a day that cannot be recovered.
How to Calculate Vacancy Rate (With a Worked Example)
The formula changes slightly depending on whether you are measuring a portfolio at a single point in time or tracking one property over a stretch of days.
Method | Formula | Best for |
|---|---|---|
Unit-based | (Vacant units ÷ Total units) × 100 | Landlords with multiple units, checked at a point in time |
Day-based | (Vacant days ÷ Total days in period) × 100 | Single-unit landlords, or tracking one property over a quarter or year |
Example 1, unit-based: You own 8 units. Right now, 1 sits vacant. Vacancy rate = (1 ÷ 8) × 100 = 12.5%.
Example 2, day-based: You own one rental. It sat vacant for 18 days during a 90-day quarter. Vacancy rate = (18 ÷ 90) × 100 = 20%.
The dollar impact matters as much as the percentage. In our own look at what property management software actually returns, RentRedi found that shrinking average turnover time from 30 days to 15 days across four annual turnovers, at $1,500 monthly rent, put roughly $3,000 back in a landlord’s pocket every year. That is the real cost vacancy rate is quantifying: every extra day a unit sits empty is a day of rent that never gets collected.
If you are already tracking other core numbers, vacancy rate belongs alongside them. We cover it as one of the rental business KPIs smart landlords track, and it also feeds directly into cash flow, which is why we walk through how the two connect in our guide to net operating income (NOI).
What Is a Good Vacancy Rate?
There is no single right answer, but national data gives a useful baseline. According to the U.S. Census Bureau’s Housing Vacancy Survey, the national rental vacancy rate was 7.3% in Q2 2026, and it varies noticeably by region and location type.
Region or location type | Q2 2026 rental vacancy rate |
|---|---|
National average | 7.3% |
South | 9.5% |
Midwest | 6.9% |
Northeast | 5.9% |
West | 5.3% |
Principal cities | 8.0% |
Suburbs | 6.9% |
Outside metro areas | 5.8% |
As a rough guide, 5-8% is generally considered a healthy vacancy rate for most residential rentals. Below 3% can signal you are underpricing relative to demand. Above 10%, sustained over more than a month or two, usually points to a pricing, condition, or marketing problem worth investigating.
Neighborhood-level swings are much bigger than the national numbers suggest. In our own breakdown of rental property investment expenses, RentRedi has noted vacancy rates as low as 2% in hot, high-demand neighborhoods, while cooler, lower-demand areas can run at 20% or higher. That is why comparing your vacancy rate to a local comp, not just a national average, gives you a far more useful benchmark.
A Real-World Example
Consider a landlord like Maria, who owns three units in Ohio. This is a common scenario, not a specific customer story. One of her three units sits vacant for 25 days during a given month, which puts that unit’s vacancy rate at roughly 83% for the month, and drags her overall portfolio vacancy rate well above her usual range.
Instead of assuming it will resolve on its own, Maria pulls recent local listings and finds she is priced about 8% above nearby comparable units. She also notices her application turnaround has been slower than usual, giving prospective tenants time to look elsewhere. She adjusts the rent slightly, tightens her screening turnaround, and the unit is leased within two weeks. Tracking the vacancy rate is what flagged the problem early enough to fix it before it cost her a second month of lost rent.
Common Mistakes to Avoid
Confusing Physical and Economic Vacancy
A fully occupied property can still be losing money if rents are below market or a tenant has stopped paying. Tracking occupancy alone hides that problem. Pair physical vacancy rate with a look at actual rent collected versus rent owed to catch it.
Comparing Your Rate to National Averages Instead of Local Comps
A 7.3% national average means very little if your neighborhood typically runs at 4% or 15%. Pull vacancy data for your specific market and property type before deciding whether your number is a problem.
Waiting Too Long to Investigate a Rising Vacancy Rate
A vacancy rate that creeps up over a few months rarely fixes itself. The earlier you dig into whether the cause is price, condition, marketing, or screening speed, the less rent you lose while you figure it out.
Not Tracking Vacancy Rate at All
Landlords who only look at bank balances tend to notice a vacancy problem months after it started. Checking vacancy rate on a regular cadence, monthly at minimum, turns a lagging problem into something you catch in week one.
Vacancy rate is simple to calculate, but the value comes from checking it regularly and reacting quickly, not from the formula itself. The questions below cover the details landlords ask most often.
FAQ
What is a good vacancy rate for a rental property?
Most residential landlords should aim for 5-8%, in line with the current national average of 7.3%. Anything under 3% may mean you are pricing below market, while a rate sustained above 10% for more than a month or two usually signals a pricing, condition, or marketing issue that needs attention.
How do you calculate vacancy rate?
Divide vacant units by total units, then multiply by 100 for a point-in-time snapshot: (vacant units ÷ total units) × 100. For a single property tracked over time, divide vacant days by total days in the period instead: (vacant days ÷ total days) × 100.
Why does vacancy rate matter for landlords?
Every day a unit sits vacant is a day of rent that is permanently lost, not deferred. Vacancy rate turns that loss into a trackable number, making it one of the fastest ways to spot a pricing, condition, or marketing problem before it costs multiple months of income.
What’s the difference between vacancy rate and occupancy rate?
They are mirror images of the same number. Occupancy rate is the percentage of units currently rented, and vacancy rate is the percentage that are not. A property with a 92% occupancy rate has an 8% vacancy rate. Most landlords track one or the other, not both, since either number tells you what you need to know.
Does vacancy rate include units under renovation or not yet listed?
It depends on how you define your denominator. Most landlords count any unit not producing rent, including units under renovation, in physical vacancy rate. If you want a cleaner read on marketing performance specifically, track “available and listed” vacancy separately from “off-market” vacancy.
What is the 2% rule, and is it related to vacancy rate?
The 2% rule is a different metric. It is a rule of thumb for evaluating a potential purchase, suggesting monthly rent should equal roughly 2% of the purchase price. Vacancy rate measures how often a unit sits empty. The two are related in that a property priced using the 2% rule still needs a realistic local vacancy rate factored into the return projection.
How can landlords lower a high vacancy rate?
Start by comparing your rent to current local listings, since overpricing is the most common cause. From there, speed up application turnaround, refresh listing photos and descriptions, and confirm the unit is syndicated to major listing sites like Zillow and Realtor.com so it reaches the widest pool of renters as quickly as possible.
Conclusion
Vacancy rate is one of the easiest numbers in rental property management to calculate and one of the easiest to ignore until it becomes expensive. Three things to do next: pull your current vacancy rate using the formula above, compare it against your local market rather than the national average, and set a recurring check-in, monthly at minimum, so a rising number gets caught early instead of after a second month of lost rent.
If you want vacancy rate and the numbers it feeds, like cash flow and NOI, tracked automatically instead of recalculated by hand every month, RentRedi’s Portfolio Performance dashboard pulls rent collection, expense, and mortgage data into one live view for every property in your portfolio.
