Rent Roll Analysis Calculator Formula

Understand the math behind the rent roll analysis calculator. Each variable explained with a worked example.

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Formulas Used

Gross Potential Rent (annual)

gross_potential_rent = gross_potential

Current Scheduled Income

current_annual_income = current_scheduled

Effective Gross Income

effective_gross = effective_income

Annual Loss-to-Lease

annual_loss_to_lease = loss_to_lease

Occupancy Rate

occupancy_pct = num_units > 0 ? (occupied_units / num_units) * 100 : 0

Average Rent as % of Market

avg_rent_to_market = market_rent > 0 ? (avg_current_rent / market_rent) * 100 : 0

Variables

VariableDescriptionDefault
num_unitsNumber of Units8
avg_current_rentAverage Current Rent(USD)1350
market_rentCurrent Market Rent(USD)1550
occupied_unitsOccupied Units7
delinquency_pctCollection Loss Rate(%)3
gross_potentialDerived value= num_units * market_rent * 12calculated
current_scheduledDerived value= occupied_units * avg_current_rent * 12calculated
vacancy_lossDerived value= (num_units - occupied_units) * market_rent * 12calculated
loss_to_leaseDerived value= occupied_units * (market_rent - avg_current_rent) * 12calculated
collection_lossDerived value= current_scheduled * delinquency_pct / 100calculated
effective_incomeDerived value= current_scheduled - collection_losscalculated

How It Works

Rent Roll Analysis

A rent roll is a record of all rental income from a property. Analyzing it reveals the gap between current income and market potential, which is critical for investors evaluating acquisitions.

Key Metrics

  • Gross Potential Rent (GPR): Total income if every unit were leased at market rate
  • Loss-to-Lease: Revenue lost because current rents are below market rate
  • Vacancy Loss: Revenue lost from unoccupied units
  • Collection Loss: Revenue lost from non-payment or delinquency
  • Effective Gross Income: What you actually collect

    • Formula

    Effective Gross Income = Scheduled Rent - Collection Loss GPR = Number of Units x Market Rent x 12 Loss-to-Lease = Occupied Units x (Market Rent - Average Current Rent) x 12

    Value-Add Opportunity

    The loss-to-lease represents a value-add opportunity. By renovating units and raising rents to market rate over time, investors can increase NOI and property value significantly.

    Worked Example

    8-unit property, 7 occupied at $1,350 average rent, market rent $1,550, 3% collection loss.

    num_units = 8avg_current_rent = 1350market_rent = 1550occupied_units = 7delinquency_pct = 3
    1. 01Gross potential rent: 8 x $1,550 x 12 = $148,800
    2. 02Current scheduled income: 7 x $1,350 x 12 = $113,400
    3. 03Loss-to-lease: 7 x ($1,550 - $1,350) x 12 = $16,800
    4. 04Collection loss: $113,400 x 3% = $3,402
    5. 05Effective gross income: $113,400 - $3,402 = $109,998
    6. 06Occupancy rate: 7 / 8 = 87.5%
    7. 07Current rent as % of market: $1,350 / $1,550 = 87.1%

    Frequently Asked Questions

    What is loss-to-lease?

    Loss-to-lease is the difference between what tenants are currently paying and what the units could command at market rate. If market rent is $1,500 and your tenant pays $1,300, the loss-to-lease is $200/month or $2,400/year for that unit.

    Why is rent roll analysis important for buyers?

    The rent roll reveals the true income potential of a property. A large loss-to-lease indicates a value-add opportunity where you can increase rents through renovations and better management. It also shows occupancy trends and collection issues.

    How quickly can I close the loss-to-lease gap?

    Typically, you can raise rents to market rate at lease renewal for existing tenants (5-10% per year to avoid excessive turnover) and at market rate for new tenants immediately. Full stabilization often takes 1-3 years depending on lease terms and renovation scope.

    Ready to run the numbers?

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