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A Realistic View of Financial Losses Due to Rental Property Vacancy

A man opening his empty wallet sitting in front of a desk. The desk has a computer, money, and check slips on it.


One of the keys to successful real estate investing is reducing rental property vacancy as much as possible. The reason behind this is quite obvious: When you don’t have tenants occupying your rental property, you aren’t making any money.

But, there are much more significant costs associated with rental vacancy than just the potential loss of income. Unfortunately, many investors don’t understand just how damaging vacancy can be in rental property finance.

Increasing your rental property income while keeping tenants happy requires a careful balancing act that can be supported by an experienced Austin property management company. 

Below, we take a look at the real costs of rental property vacancy in real estate investing to highlight how important it is to keep tenants happy.

Why Reducing Rental Vacancy is So Important

When you don’t have tenants in your rental property, you won’t be making any money. This loss of potential rental income can have a significant impact on rental property owners. 

The financial challenges that this can cause are even more pronounced for investors who own a few single-family rental homes compared to, say, a large corporation that owns multiple high-rise apartment buildings. These individuals often have much fewer assets to help offset a loss of rental income, making reducing rental vacancy even more important to them.

That’s why an experienced Austin property management team will help its clients understand the importance of keeping tenants happy by not raising rents too high, repairing items quickly and treating all tenants with respect.

Loss of Potential Income Calculation

Calculating the potential loss of income from rental property vacancy is rather simple. All you have to do is multiply the monthly rental income by the length of time that the property is vacant.

If, for example, the monthly rent is $2,500 and the rental property vacancy lasts four months, then the loss of rental income is $10,000. That alone is quite the substantial hit to the bottom line in real estate investing.

The problem with that calculation, though, is that it doesn’t tell the whole story. There are many more factors that go into rental vacancy that can significantly increase the sum of that calculation. And while the above is a representation of potential income lost, some of the other factors of vacancy result in direct out-of-pocket costs that rental property owners must shell out.

Other Rental Property Finance Factors Related to Vacancy

One of the major costs associated with rental vacancy are utilities. Depending on the arrangement, tenants may be shouldering at least part of the cost of these utilities when they are occupying the unit. 

When it becomes vacant, though, the rental property owner must pay for the utilities. You may think that it’s OK to simply shut off the utilities while your rental property is experiencing a vacancy, but that’s not a good idea.

If you shut off the heat, for instance, you could risk that the pipes might burst, causing significant damage. Likewise, shutting off the air conditioning during summer months could cause major issues inside your rental property as well.

In addition, when you show your rental property to prospective tenants, you want to make sure you are presenting them with a safe and comfortable space. This requires heat and air conditioning, depending on the time of year, as well as the ability for them to turn on the water and the lights during tours. In other words, it’s simply not an option to turn off utilities during a vacancy. 

It’s also important to keep your rental property clean and fresh while it’s vacant so you can present it in the best light to prospective tenants. While hiring a professional cleaning service is a great idea because it saves you the time and hassle of doing it yourself, it also comes with a price.

To attract tenants to your property, you’ll also need to advertise that it’s for rent — which, again, is another added cost of rental property vacancy.

Total Average Cost of Rental Vacancy

So, in addition to loss of potential rental income stated above, real estate investing has other costs related to vacancy, including:

  • Utilities
  • Cleaning services
  • Marketing/advertising

Energy Star estimates that the annual energy bill for a typical single-family home is $2,060. That breaks down to an additional $172 per month.

Cleaning services could cost between $120 to $250, depending on the size of the home, and the scope and frequency of the job.

Marketing and advertising costs can vary greatly, but could add up to a few hundred dollars more.

Using the example from above — with a monthly rent of $2,500 and a four-month period without tenants — the total cost of rental property vacancy could be $11,238 …

  • Loss of rental income: $10,000
  • Utilities: $688
  • Cleaning services: $250
  • Marketing/advertising: $300

Partner with 1836 Property Management

The above realistic view of financial losses highlights just how important it is to reduce rental property vacancy — as well as keeping your property well-maintained and ready to show to prospective tenants should you experience a vacancy.

When you work with an experienced Austin property management company such as 1836 Property Management, you’ll be ensuring that you have the right team on your side to help you master the art of tenant retention. And when you do inevitably experience a rental vacancy, our team of professionals can help you get your property rented again in no time.

Contact us today to find out more about how we can help you be successful in real estate investing. 



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