Definition: Vacancy and collection losses are reductions in potential rental income caused by unoccupied space and rent that is not collected.
Example
A property has $120,000 of potential annual rent and a combined 5% vacancy-and-collection allowance. The deduction is $6,000.
Keep the distinction clear
If the problem supplies one combined loss rate, apply it once. Do not subtract the full combined rate separately for vacancy and again for collections.
Related terms
Potential Gross Income (PGI) · Effective Gross Income (EGI) · Net Operating Income (NOI)
Keep studying
Vacancy and Collection Loss: Calculate EGI and NOI
References: OCC archive: Income-property financial analysis
Pronunciation (US): VAY-kuhn-see and kuh-LEK-shun LAW-siz (capitals show stress)
Pronunciation reference: Merriam-Webster
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