One vacant month costs more than the missing rent

Sep 2

2 min read

BV Finance graphic showing rental income stopped while investment property holding costs continue

When an investment property is vacant, rental income stops but the mortgage and ownership costs do not. Moneysmart warns investors not to rely on rent always covering repayments and expenses, because the owner may need to fund all costs while there is no tenant.

Ongoing costs can include council and water rates, building or landlord insurance, body corporate fees, land tax, property management and repairs. Tax treatment may affect the final after-tax result, but a possible deduction does not pay a bill when it falls due.

Illustrative example: compare a tenanted month with a vacant month

Australian property investor comparing a tenanted month with a vacant month cash-flow shortfall

Expected rent — $700 per week is approximately $3,033 per month when calculated as $700 × 52 ÷ 12.

Monthly outgoings — assume $3,900 for the mortgage and property holding costs combined.

Tenanted month — $3,033 income less $3,900 outgoings leaves an approximate $867 cash-flow shortfall.

Vacant month — $0 rental income leaves the owner funding the full $3,900 outgoings.

This is a simple illustration, not a market average or property quote. Actual rent, vacancy, mortgage payments, ownership costs and tax treatment vary.

Four amounts to test before buying

BV Finance vacancy checklist covering loan repayments, property outgoings, repairs and cash buffer

Loan repayment — use the repayment that would actually apply to the proposed loan, including what happens after any interest-only period.

Property outgoings — annualise rates, insurance, strata, land tax and management costs, then convert them to a monthly allowance.

Repairs — keep a separate allowance because an empty property can still need urgent work.

Vacancy buffer — test at least one month with no rent and confirm the household can fund the full shortfall without relying on new debt.

Bottom line

Weekly rent is only the income line. The investment decision needs a full holding-cost budget and a cash buffer that still works when rent temporarily falls to zero.

Sources

Moneysmart — Buying an investment property

Australian Taxation Office — Residential rental properties

Australian Bureau of Statistics — Lending indicators, June quarter 2026

General information only. This is not financial advice. Loan options and eligibility depend on your personal income, liabilities, assets and lender assessment criteria.