The vacancy rate is used to determine how long a rental property is occupied in a year in terms of percentage. Properties that are vacant are not cash generating so minimizing the vacancy rate is important. You can create a vacancy rate across the entire portfolio or on per unit basis.
One important thing to note, vacancy rate should only be measured on the "rentable days." This means if you're doing gut renovation, the days where it's impossible to rent out should not be factored into the equation.
\[ Number \, of \, days \, vacant \over Number \, of \, rentable \, days \, in \, the \, year = Vacancy rate \]
Suppose I have 3 rental units and this year has 365 days.
My vacancy rates are as follows: