'My 5½ has been empty for six weeks, it's costing me $2,500 a month.' You hear that often. It's almost always wrong — sometimes too high, sometimes too low. And since this is the number that triggers decisions (lower the rent, accept an average candidate, delegate the listing), it's worth computing correctly.
This article gives the correct calculation, month by month, for a typical Montreal unit. Then it prices the two hidden costs vacancy triggers, which very often cost more than the vacancy itself.
The most common calculation error
The error is adding up lost rent AND the full mortgage, taxes and insurance. That's double counting. Your mortgage, municipal taxes and base insurance are owed whether the unit is leased or not: they are not caused by the vacancy.
What vacancy takes from you is the income that was paying for them. The real economic cost of an empty month is therefore the uncollected rent, plus only those costs the vacancy itself creates.
The correct calculation for a $1,700 5½
Take a Montreal unit whose market rent is $1,700 a month, in a conventionally financed plex.
| Item | Monthly amount | Counts in the cost of vacancy? |
|---|---|---|
| Rent not collected | $1,700 | Yes — this is the core of the cost |
| Share of mortgage, taxes, base insurance | ≈ $1,780 | No — owed even if the unit is leased |
| Unoccupied-unit insurance surcharge | $30 – $80 | Yes — caused by the vacancy |
| Minimum frost protection heating and base electricity | $60 – $150 | Yes — caused by the vacancy |
| Re-listing (ad, photos, showings, verifications) | Variable | Yes — recurring on every re-lease |
Real economic cost of one vacant month: about $1,850. Cash outflow to fund that month: about $1,780, since the charges must be paid without rent to cover them. The share of charges corresponds to one third of a triplex financed at 5.0% over 25 years, with $8,500 of annual taxes and $2,200 of insurance.
The month-by-month cumulative
| Vacancy length | Lost rent | Vacancy-specific costs | Total economic cost | Cumulative cash outflow |
|---|---|---|---|---|
| 1 month | $1,700 | $150 | $1,850 | $1,780 |
| 2 months | $3,400 | $300 | $3,700 | $3,560 |
| 3 months | $5,100 | $450 | $5,550 | $5,340 |
| 6 months | $10,200 | $900 | $11,100 | $10,680 |
The psychological threshold sits around the third month. That's generally when the owner starts making concessions — and precisely when the two hidden costs appear.
Hidden cost #1: cutting the rent to stop the bleeding
After eight weeks without a serious candidate, the temptation is to drop $150 to 'get things moving'. Let's do the full calculation.
- A $150 monthly reduction over a 12-month lease: $1,800 of lost income
- One additional vacant month: about $1,850
- Both options therefore cost almost exactly the same in year one
Except the resemblance stops there. The vacant month is a one-time cost: it disappears once the unit is leased. The rent reduction becomes your new starting point. The next renewal builds on it, the annual increase applies to it, and the next tenant's Annex G will declare that rent.
The practical conclusion isn't 'never lower the rent'. It's: before lowering, first check whether the problem is the price or the listing. An incomplete ad, dark photos or slow replies produce exactly the same symptoms as an overpriced unit.
Hidden cost #2: the tenant accepted out of impatience
The second reflex in month three is to loosen the criteria. The file is incomplete, references are vague, the effort ratio is borderline — but the candidate is there, and the unit has been empty too long.
This is the costliest trade-off in the business. One more vacant month costs $1,850. A tenant who stops paying costs the unpaid rent, TAL procedural delays, possible damages, then the re-lease — an order of magnitude higher, with no ceiling known in advance.
What it looks like across a full plex
On a triplex whose three units rent for $1,700, gross annual income is $61,200. If turnover generates an average of three vacant months per year across all units, the loss is $5,550 — about 9% of gross income. That is not a pessimistic scenario: according to CMHC, between 8.7% and 16.9% of Montreal units changed tenant in 2025 depending on the rent quartile, while the vacancy rate was only 2.9%. It is turnover, not structural vacancy, that drains your income.
That figure should be compared directly to two things: the vacancy reserve in your financial model (often set at 4 or 5%, therefore understated), and the cost of a professional listing process. If a structured process brings average vacancy from three months down to one, the saving is $3,700 a year, every year.
The 5 levers that actually reduce vacancy
- 1Start listing the moment you receive the departure notice, not when the unit is emptied — it's the only lever that removes vacancy rather than shortening it.
- 2Set the rent on real neighbourhood comparables, not on the return you'd like to earn.
- 3Publish a complete ad: rent, availability, inclusions, clear photos of every room. Incomplete enquiries come from incomplete ads.
- 4Reply fast. A good candidate views several units the same week and signs with the first one that responds seriously.
- 5Pre-screen before showings rather than after, so you only meet genuinely eligible files.