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

    Frequently Asked Questions

    How much does tenant turnover really cost?

    Total turnover cost typically ranges from $1,500 to $5,000 or more, depending on the market and unit condition. This includes vacancy loss, painting, cleaning, repairs, marketing, and leasing commissions. Many landlords underestimate these costs.

    What is the break-even rent for a new tenant?

    The break-even rent is the monthly amount a new tenant would need to pay for the turnover to produce the same net revenue as renewing the current tenant. If the market rent is below this threshold, renewing is financially better.

    Should I always keep the current tenant?

    Not necessarily. If the tenant is problematic, causes damage, or pays late frequently, the tangible and intangible costs of keeping them may exceed turnover costs. Also, if the unit needs significant updates, turnover is a natural time to complete them.

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