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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