Vacancy Rate
The share of units or time a rental sits empty and producing no income, expressed as a percentage. A single unit vacant one month out of twelve has an 8.3% vacancy rate for the year. Investors underwrite an assumed vacancy rate so that one bad month does not surprise the whole year’s numbers.
Related terms
Turnover
The process — and cost — of one tenancy ending and the next beginning: cleaning, repairs, repainting, marketing, showing, and screening, plus the rent lost while the unit sits empty in between. Turnover is one of the largest controllable costs in rental operations, which is why retention gets so much attention.
Rent Roll
A document listing every unit in a property or portfolio along with its tenant, rent, lease dates, and payment status — a one-page snapshot of the income side of the operation. Lenders and buyers ask for the rent roll early because it shows, unit by unit, where the income actually comes from and how current it is.
Operating Expenses
The recurring costs of running a property: property taxes, insurance, management, routine maintenance, utilities the owner pays, and similar line items. Operating expenses exclude mortgage payments and capital expenditures. Subtracting them from income yields NOI, so what counts as an operating expense directly shapes every metric built on it.