Dictionary of Real Estate Terms: vacancy and collection allowance
vacancy and collection allowance
an estimated amount to be deducted from potential gross income when preparing a budget. The vacancy rate budgeted may be the rate being experienced or forecasted for the market for the coming year, or a higher or lower amount depending on tenant loyalty, rent concessions, or management quality.
Example: In a college town, the apartment vacancy and collection allowance expected was a blend of 5% during the 9-month regular college term and 25% during the summer session. Overall, it was 10%.
