What an empty month actually costs

Two numbers decide how you price a unit that is sitting empty, and most people only look at one. The first is what the empty days cost. The second is what a rent cut costs. Put both in the same units and the decision stops being a guess about the price.

Read the last two together. If cutting the rent fills the unit more than that many days sooner, the cut is the cheaper choice. If it does not, holding the price is.

It is common for vacancy calculators to add the mortgage payment, or the taxes and the insurance, on top of the lost rent. Some do it inside the arithmetic; others tell you to add it yourself for a "complete" daily cost. Either way it counts the same money twice.

Those bills come out of your account whether or not anyone lives there. When the unit is occupied, the rent is what covers them. So the cost of a vacancy is the rent that did not arrive, plus what it takes to get the next tenant in. Nothing else belongs in that total.

It matters because an inflated number talks you into things. A vacancy that "costs" $3,900 instead of $2,800 makes a bad rent cut look sensible. The figure above is the one you can defend line by line.

The mortgage does belong in a different question: whether the rent covers the property at all. That is break-even rent, and it has its own page.

A rent cut lasts as long as the lease. An empty day happens once. That is the argument for holding the price. The counterweight is size: $50 a month is $600 over a year, which at $1,850 rent is about ten days of full rent.

So the question is not whether you want less rent. It is whether holding the price costs you more than those ten days. If the unit has been listed for three weeks with two showings, it probably does.

What the arithmetic cannot tell you is why it is empty. A unit that is priced right in a slow season is a different problem from one that is priced right with bad photographs, and neither is fixed by a calculator.

Vacancy is the risk the other numbers assume away. A cash flow figure quietly assumes twelve months of rent, and a cap rate assumes the same. The number that tells you how much margin a property has above its costs is the break-even rent, and the Deal Screener shows it for five properties at once.

It opens in Excel and in Google Sheets, every formula is readable, and it costs nothing. How each one is checked before a file ships is written out in How We Test.