Question

A long-term resident moves out of apartment #35 on the last day of May because
they are unhappy with their neighbor, and later a new resident takes possession on
June 16. You begin to wonder what the total economic cost of the vacancy was.
The rent on the apartment is $650. Painting labor cost you $250, and you had to
purchase 3.5 gallons of paint at $12 per gallon. The cleaner cost $85, and the carpet
cleaner charged you $75. You ran an ad in the Oregonian for $350 to get the
apartment rented. In order to convince the resident to sign a lease, you had to give
him a 1/2-month rent-free lease concession (assume a 30 day month)

Answer 1

First find the lost rent during the vacancy:
- Vacancy = June 1–15 = 15 days out of a 30-day month → lost rent = 15/30 × $650 = $325

Other costs:
- Painting labor = $250
- Paint = 3.5 gal × $12 = $42
- Cleaner = $85
- Carpet cleaner = $75
- Advertising = $350
- Lease concession = 0.5 month × $650 = $325

Total economic cost = 325 (lost rent) + 250 + 42 + 85 + 75 + 350 + 325 (concession)
= $1,452.