Occupancy, economic occupancy and delinquency: the metrics that show how a property is doing
Physical occupancy is the share of units with a tenant. Economic occupancy is the share of the building's full potential rent you actually collected. Delinquency is the share of rent you billed that is still unpaid. A building can be 100% occupied and still struggle; the three numbers together show whether units are filled, priced right and paying.
The three numbers
| Metric | Formula | What it answers |
|---|---|---|
| Physical occupancy | Occupied units / total units | Are the units filled? |
| Economic occupancy | Rent collected / gross potential rent | How much of the possible income did I actually get? |
| Delinquency rate | Unpaid rent billed / rent billed | Are the people living here paying? |
Gross potential rent is what every unit would bring in at full market rent if all of them were rented and everyone paid. It is the ceiling against which economic occupancy is measured.
You will also see vacancy rates in government data. The U.S. Census Bureau's Housing Vacancies and Homeownership definitions describe the rental vacancy rate as the proportion of the rental inventory which is vacant for rent. That is a market statistic for whole areas; the formulas above are for your own building.
Where the gap between them comes from
Economic occupancy is almost always lower than physical occupancy. The difference is made of four kinds of loss:
- Vacancy loss: rent you would have earned on empty units.
- Loss to lease: tenants paying less than today's market rent, often long-time tenants on older leases.
- Concessions: free weeks or discounts you gave to sign or renew a lease.
- Unpaid rent: rent billed to an occupied unit that was not paid.
Each loss has a different fix. Vacancy points to marketing, pricing or turnover speed. Loss to lease points to renewal pricing. Concessions point to how hard leasing is. Unpaid rent points to collections.
A worked example
Example a made-up 24 unit building with a market rent of $1,200 a unit. Gross potential rent is 24 x $1,200 = $28,800 for the month. Two units are empty, so 22 are occupied and physical occupancy is 22 / 24 = 91.7%. Vacancy loss is 2 x $1,200 = $2,400. Two long-time tenants pay $1,100, a loss to lease of $200 in total. One new tenant got $200 off as a concession. Rent billed to the 22 occupied units is 22 x $1,200 - $200 - $200 = $26,000. One tenant has not paid $1,200, so $24,800 was collected.
| Line | Amount |
|---|---|
| Gross potential rent | $28,800 |
| Less vacancy loss | -$2,400 |
| Less loss to lease | -$200 |
| Less concessions | -$200 |
| Rent billed | $26,000 |
| Less unpaid rent | -$1,200 |
| Rent collected | $24,800 |
So physical occupancy is 91.7%, economic occupancy is $24,800 / $28,800 = 86.1%, and the delinquency rate is $1,200 / $26,000 = 4.6%. The biggest single loss is the two empty units, so the first job this month is filling them, not chasing the one late tenant.
How to track them every month
- Pick one date, such as the 10th, and measure every month on that date so the numbers are comparable.
- Count occupied and vacant units from the rent roll. Decide once how to count a unit that is leased but not moved into yet, and keep it the same.
- Use the same market rent per unit type for gross potential rent until you deliberately update it.
- Separate rent from other income such as fees and laundry, so the percentages measure rent only.
- Keep a 12 month line for each metric. A single month says little; the trend says a lot.
Reading the numbers together
| Pattern | Likely meaning |
|---|---|
| High physical, low economic occupancy | Rents below market, heavy concessions or unpaid rent |
| Low physical, high delinquency | Turnover problems plus collection problems: look at tenant selection |
| Delinquency rising for three months | Act early: reminders, payment plans, and the notice steps your state allows |
| All three steady and close together | A healthy, well priced building |
Look for the metric that moves first. A tenant who falls behind for two months in a row may be heading for a move-out, and economic occupancy can slip quietly when renewal rents fall behind the market, well before the bank balance shows it. Watching the 12 month line lets you act while the fix is still small: a conversation with a tenant, a price check before renewals, or faster turnover on the next vacancy.
How DoorKeeping shows them
In DoorKeeping you can ask Claude or ChatGPT for a portfolio summary, which counts units by status and shows scheduled monthly rent, or for the rent roll as of any date, with each tenant's rent and deposit. Each property keeps its own books, so collected rent per property comes straight from its ledger, and you see every property side by side in the web app.
Sources
Questions
- What is the difference between occupancy and economic occupancy?
- Occupancy counts units with tenants. Economic occupancy compares the rent you collected to the rent every unit could bring at market rates, so it also captures discounts, below-market rents and unpaid rent.
- How do you calculate the delinquency rate for rent?
- Divide the rent billed but still unpaid by the total rent billed for the period, using the same measuring date every month.
- Should a leased unit that is not moved into count as occupied?
- Pick one rule and keep it. Many owners count it as leased but not occupied, and track both counts.