What a vacant month actually costs on a $2,700 house
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We said we'd share the numbers as they happen. Here's one happening right now: a 4 bed, 2 bath in Rocky Ripple, listed at $2,700 a month, between tenants.
The obvious cost
A month empty is $2,700 of rent that never arrives. That's 8.3% of the year's income, gone, from one turn. It's why every serious underwriting model carries a vacancy allowance, and why a house that only works at 100% occupancy doesn't work.
The less obvious cost
The mortgage, taxes and insurance don't pause. On this house that's roughly the PITIA you'd see on our listing card, and it comes out of our pocket instead of the tenant's for every week the sign is in the yard. Add the things a tenant normally carries: utilities have to stay on for showings (in Indianapolis, figure $150 to $250 a month for gas, electric and water on a house this size), the lawn still needs cutting, and if it's winter the furnace runs so pipes don't freeze.
Then the turn itself: cleaning, paint touch-ups, the small repairs you only find with the furniture gone. Budget for it every time; the cheap turns pay for the expensive ones.
| Lost rent, one month | $2,700 |
|---|---|
| Utilities carried while empty | ~$200 |
| Lawn / upkeep | ~$100 |
| Turn (clean, paint, minor repairs) | varies, budget $500+ |
| Cost of one empty month | $3,500 or more |
| Cost of each extra empty week | ~$700 |
The $100 question
Here's the decision every landlord faces and most get wrong on instinct. Two applicants a week apart: do you hold at $2,700 or drop to $2,600 to fill it now?
A $100 cut costs $1,200 over a 12-month lease. Two more empty weeks cost about $1,400 in rent plus carrying costs. So if the cut fills the house even two weeks sooner, the cut wins, and it wins by more if the tenant renews. Holding out for full price is only right when you're confident the wait is short. Most people aren't confident; they're hopeful.
The reverse is also true. Cutting $300 to fill it one week faster throws away $3,600 to save $700. The math has an answer either way; the mistake is not doing it.
What we underwrite with
For a single-family house in a decent Indianapolis neighbourhood we assume one month vacant every two years, roughly 4%, and we stress-test at 8%. That, plus a repair reserve, is why our walk-away line is a 1.20 DSCR and not 1.00. The 20% of cushion is the vacant month, pre-paid.
Remote makes it worse, and better
From 6,000 miles away we can't run a showing at 6 pm on a Tuesday. Our property manager can, and we pay for that. What we can do is answer inquiries within the hour, keep the listing on every channel, and fix the small things fast: this week we found our Facebook listing had been showing prices in shekels for days because the account's region was set to Israel. Small setting, real exposure lost, during a vacancy. That's its own post.
We'll update this one with the actual leased rent and the days it took. Good or bad.
Triad Global
Run the same underwriting we run before we buy — rent comps, DSCR, and price per square foot against the ZIP.
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Written by Triad Global
Triad Global, LLC is an Indianapolis rental-property owner-operator run by a small partner team. We buy, hold and manage single-family and small multifamily rentals ourselves, and we built the free tools below because we needed them for our own underwriting.
