cost to rent ratio

[Mike Dymski]

Silly question but is it the norm to include vacancy in the cost figure and use gross rent in the denominator?

I have been netting vacancy against the rent rather than including it in the cost.  In the end, as long as I include vacancy in my modeling, I'm fine but want to have comparable ratios with others when hearing about the 50% rule of thumbs and other property analysis.

[Jeff Greenberg]

I use gross potential (all units rented at their current rate) and then subtract either market vacancy or property vacancy, which ever is higher.