Vacancy & Bad-Debt Sensitivity Calculator
Analyze how vacancy and bad debt rates impact NOI and property value. Stress test your rental income assumptions.
How it works
Shows NOI and value impact of different vacancy/bad debt scenarios. Higher vacancy = lower NOI = lower property value.
Example
5% vacancy + 2% bad debt = 7% income loss. On $60K gross rent = $4,200 NOI reduction, $70K value decrease at 6% cap.
FAQ
What's a normal vacancy rate?
3-7% for well-managed properties in stable markets. Higher in transitional areas or with poor management. Factor in both physical and economic vacancy.
What's the difference between vacancy and bad debt?
Vacancy is unoccupied units; bad debt is occupied units not paying rent. Both reduce effective income but bad debt may have additional legal/eviction costs.
How do I reduce vacancy rates?
Competitive pricing, property condition, responsive management, tenant screening, lease renewal incentives, and market timing for turnovers.
Should I budget conservatively for vacancy?
Yes, especially for cash flow analysis. Use historical data or market averages, and stress-test with higher vacancy scenarios to ensure adequate cash reserves.
How does vacancy affect financing?
Lenders use vacancy assumptions in underwriting. Higher vacancy rates reduce qualifying income and may affect loan terms or require larger cash reserves.