Feeds directly into this site’s cap rate, cash-on-cash, and DSCR calculators — effective gross income is the revenue line those net operating income calculations actually start from.
How it works
Vacancy rate is vacant unit-months divided by total available unit-months. Effective gross income is potential gross rent reduced by that same vacancy rate — the revenue a property actually generates once realistic vacancy is factored in.
What this does not include
This uses a flat vacancy rate applied evenly across the year — a property with seasonal vacancy patterns or a specific unit sitting empty for an unusually long stretch may need a more detailed unit-by-unit calculation this simplified version doesn’t provide.
How to use this calculator
- Enter potential gross rent (as if fully occupied) and total available unit-months.
- Enter vacant unit-months over the period.
Frequently asked questions
What’s a unit-month?
One unit available (or vacant) for one month — a 10-unit building has 120 unit-months available in a year; if 1 unit sat vacant for the full year, that’s 12 vacant unit-months.
Why not just use potential gross rent for NOI calculations?
Because potential gross rent assumes full occupancy, which overstates real revenue — effective gross income is the more accurate starting point for cap rate, cash-on-cash, and DSCR calculations.
What’s a typical vacancy rate?
It varies significantly by market and property type — comparing a property’s actual vacancy against its local market average is more useful than any universal benchmark.
