How Vacancy Months Quietly Wreck Your Rental Yield

Ask a landlord how much their rental earns and most will multiply monthly rent by twelve. That number assumes the property is occupied every single month of the year — an assumption that's rarely true and, when it's wrong, quietly inflates every other number downstream of it.

The formula is simple; the assumption is where it breaks

Vacancy loss is straightforward: monthly rent × vacant months. The problem isn't the math, it's that "how many months will this sit empty?" is a genuine forecast, not a known fact — and it's tempting to plug in zero because zero is the easiest number to type.

What one extra month of vacancy actually costs

Take the same property from our yield calculator's default example: €180,000 purchase price, 10% buying costs (so €198,000 total acquisition cost), renting for €850/month, €1,400 in annual expenses.

Each additional month of vacancy costs roughly 0.4 points of yield on this property — and that's before accounting for the extra costs a longer vacancy usually brings with it (re-listing, cleaning, sometimes a discount to fill the gap faster).

Why our calculator flags a zero-vacancy assumption

If you enter 0 vacant months, the rental yield calculator marks the result "Needs review" rather than showing it with full confidence. That's a deliberate signal, not a bug: zero vacancy is achievable in a hot rental market with a reliable tenant, but it's an optimistic assumption to build a decision around, not a safe default. The same flag triggers if annual expenses look implausibly low relative to rent — both are common ways a rental's real return gets overstated without anyone intending to mislead.

What's a realistic vacancy assumption?

There's no universal number — it depends heavily on your city, the property's condition and price point, and how actively it's marketed. As a starting point:

• 1 month/year is a reasonable default for an average property in a liquid rental market, and is what we use as the calculator's default.
• Longer if the property is priced above the local market, needs work between tenants, or is in a less liquid area.
• Shorter only if you have a specific reason to expect it (an existing waiting list, a long-term tenant already lined up).

Quick answers

Should I use my own vacancy history if I already own the property? Yes — your own track record over 2–3 years is a better input than any generic assumption. Use the generic 1-month default only when you don't have that history yet (e.g., evaluating a purchase).

Does a longer initial vacancy while finding the first tenant count the same way? For an ongoing annual estimate, no — that's a one-time ramp-up cost, not a recurring annual pattern. Model it separately from the year-over-year vacancy assumption.

Is vacancy risk different for short-term/seasonal rentals? Yes, meaningfully — seasonal rentals have a fundamentally different occupancy pattern than long-term leases. We're planning a dedicated comparison of the two strategies; for a standard long-term rental, the approach above applies directly.

Test your own vacancy assumptions

Try a few different vacancy scenarios in the rental yield calculator — seeing the yield move in real time is the fastest way to understand how sensitive your specific numbers are.

This article offers general, educational information and does not constitute tax, legal, or financial advice. Figures depend on the inputs used and general assumptions; consult a professional before making investment decisions.