Vacancy loss is the income that evaporates while a unit sits empty — between tenants, during a renovation, or because it simply has not leased. If a $1,500-a-month unit takes two months to fill, that turnover cost you $3,000 of vacancy loss before you count a dollar of make-ready expense. Expressed as a percentage of gross potential rent, it becomes the vacancy rate that underwriting models lean on.
Two habits keep vacancy loss honest. First, budget for it even when you are full: a realistic allowance in your pro forma acknowledges that turnover happens, and a model with zero vacancy is telling you a story. Second, measure it in days, not vibes — days vacant per turnover is a number you can manage down with faster make-ready, earlier renewal conversations, and pre-marketing before move-out.