Vacancy Rate (Leerstandsquote)
Time your property sits empty
Vacancy rate (Leerstandsquote) measures the percentage of time your property sits empty without generating rental income. It's a critical factor in calculating realistic investment returns.
How to Calculate Vacancy Rate
Vacancy Rate = (Vacant Days / Total Days) × 100
Example: Empty for 30 days in a year = 30/365 = 8.2% vacancy rate
Real Example: Impact on Returns
€450,000 Property with €1,800/month rent:
0% Vacancy (Unrealistic):
- Annual rent: €21,600
- Gross yield: 4.8%
8% Vacancy (Realistic):
- Effective rent: €19,872
- Effective yield: 4.4%
8% vacancy = €1,728 less income per year (one month's rent lost)
Typical Vacancy Rates in Germany
- Major cities (Berlin, Munich, Hamburg): 2-5% (high demand)
- Mid-sized cities: 5-8% (normal turnover)
- Rural/declining areas: 10-15%+ (weak demand)
- Student properties: 8-12% (annual turnover between semesters)
Conservative Investment Modeling
Always budget for vacancy
Even in hot markets, budget at least 1 month per year (8.3%) for vacancy. This accounts for:
• Tenant turnover between leases
• Maintenance/painting between tenants
• Unexpected vacancies
• Market downturns
Reducing Vacancy
- Screen tenants carefully: Good tenants stay longer (3-5 years average)
- Competitive pricing: Don't price 10% above market
- Maintain the property: Well-kept units attract better tenants
- Fast turnaround: Pre-market before current tenant leaves
- Offer renewals early: Incentivize existing tenants to stay
The Hidden Cost of Vacancy
Vacancy doesn't just mean lost rent. You still pay:
- Mortgage payments
- Property tax and insurance
- HOA fees (for condos)
- Utilities if not passed to tenant
Tax Treatment
Important: You cannot deduct theoretical "vacancy loss." The tax office only recognizes actual expenses and income. However, you can still deduct all operating costs (mortgage interest, AfA, maintenance) even when the property is vacant.