Lease Renewal Analysis Calculator Formula

Understand the math behind the lease renewal analysis calculator. Each variable explained with a worked example.

Use the Lease Renewal Analysis Calculator

Formulas Used

Total Revenue if Renewed

renewal_revenue = renewal_annual

Total Revenue with New Tenant

new_tenant_revenue = new_tenant_net

Net Advantage of Best Option

difference = abs(renewal_annual - new_tenant_net)

Total Turnover Cost

turnover_cost = turnover_total_cost

Lost Rent During Vacancy

lost_rent = vacancy_cost

Break-Even New Tenant Rent

break_even_rent = lease_term_months > 0 ? (renewal_annual + turnover_total_cost) / lease_term_months : 0

Variables

VariableDescriptionDefault
current_rentCurrent Monthly Rent(USD)1650
renewal_rentProposed Renewal Rent(USD)1750
market_rentMarket Rent for New Tenant(USD)1850
vacancy_daysExpected Vacancy (days)30
make_ready_costMake-Ready / Turnover Cost(USD)2500
leasing_feeLeasing Commission / Fee(USD)1000
lease_term_monthsNew Lease Term (months)12
renewal_annualDerived value= renewal_rent * lease_term_monthscalculated
vacancy_costDerived value= market_rent / 30 * vacancy_dayscalculated
turnover_total_costDerived value= vacancy_cost + make_ready_cost + leasing_feecalculated
new_tenant_grossDerived value= market_rent * lease_term_monthscalculated
new_tenant_netDerived value= new_tenant_gross - turnover_total_costcalculated

How It Works

Lease Renewal vs. Turnover Analysis

Deciding whether to renew a current tenant or turn the unit for a new tenant requires comparing total net revenue, not just the monthly rent difference.

Renewal Path

Total Revenue = Renewal Rent x Lease Term

Turnover Path

Total Revenue = (Market Rent x Lease Term) - Vacancy Loss - Make-Ready Cost - Leasing Fee

Hidden Turnover Costs

  • Vacancy loss: Typically 2-6 weeks of lost rent
  • Make-ready: Paint, cleaning, minor repairs ($500 to $5,000+)
  • Leasing costs: Advertising, screening, agent commission
  • Administrative time: Showings, applications, lease preparation

    • When to Renew vs. Turn

  • Renew if turnover costs exceed the rent difference over the lease term
  • Turn if market rent is significantly higher and the unit needs updates anyway

    • Worked Example

    Current rent $1,650, renewal offer $1,750, market rent $1,850, 30 days vacancy, $2,500 make-ready, $1,000 leasing fee, 12-month lease.

    current_rent = 1650renewal_rent = 1750market_rent = 1850vacancy_days = 30make_ready_cost = 2500leasing_fee = 1000lease_term_months = 12
    1. 01Renewal revenue: $1,750 x 12 = $21,000
    2. 02Vacancy cost: $1,850 / 30 x 30 = $1,850
    3. 03Total turnover cost: $1,850 + $2,500 + $1,000 = $5,350
    4. 04New tenant gross: $1,850 x 12 = $22,200
    5. 05New tenant net: $22,200 - $5,350 = $16,850
    6. 06Renewal wins by: $21,000 - $16,850 = $4,150
    7. 07Break-even new rent: ($21,000 + $5,350) / 12 = $2,196

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