Rental Vacancy and Credit Loss
Rental Vacancy and Credit Loss (RVCL) in real estate is the loss of rental revenue due to vacant units and non-payment of rent.
To calculate RVCL:
Determine an expected percentage of loss due to vacancy and non-payment by checking comparable properties and the recent
loss experienced by the subject property.Last year's vacancy and credit loss from the subject property may have been 4% of net operating income. Other comparable properties have experienced an average of 5%. Select an average value such as 4.50%.
Adjust the net operating income for next year by any anticipated rent increases. If you are anticipating a 5% increase in rent, and net operating income this year is $50,000, then:
$50,000 X 1.05 = $52,500
Calculate the expected monetary loss for next year due to vacancy and credit losses:
$52,500 (net operating income) x .0450 (4.5%) loss estimate = $2,362.50 in RVCL
RVCL is therefore $2,362.50