Every number below is already in your rent roll. Nothing here is a projection or an estimate, and there's no coefficient I picked to make the answer look worse. It's subtraction, and you can check it against last month's deposits.
| The ceiling | |
| Total unitsEvery door you own, occupied or not | |
| Market rent per unitWhat one of these leases for today, not what it leased for in 2023 | |
| What's actually happening | |
| Occupied and paying unitsLeased to a resident. Count them even if they're behind. | |
| Average in-place rentWhat those residents are actually contracted to pay | |
| Non-revenue unitsModel, office, employee unit, anything down and offline | |
| Concessions this monthFree rent, discounts, waived fees, in dollars | |
| Billed but not collectedThis month's rent still outstanding | |
Six lines of arithmetic. Monthly figures, multiplied by twelve.
Gross potential rent = total units × market rent. The ceiling, whether or not anyone is paying it.Vacancy = (total units − occupied − non-revenue) × market rent.Non-revenue = non-revenue units × market rent. A model apartment is a marketing expense you pay in rent instead of dollars, so it never shows up on the P&L.Loss to lease = occupied units × (market rent − average in-place rent). If your in-place rents are above market this goes negative, and it should, because then you're collecting a premium.Concessions and uncollected rent come across exactly as you typed them.Economic occupancy = collected ÷ gross potential rent. Physical occupancy is just occupied ÷ total units.One deliberate simplification: uncollected rent is counted at full value for the month. Some of it you'll collect late and some you'll write off, so treat that line as exposure rather than as a loss already taken.
The total matters less than which line is biggest, because each line is a different problem with a different fix and they are not equally urgent.
Vacancy is a leasing and marketing problem, and the one everybody already knows how to work on. It also fixes itself fastest, so it gets all the attention while the other four quietly cost more.
Somebody made a decision once and nobody has revisited it. A model unit on a 48-unit property that leases in nine days is a $17,000-a-year marketing expense. Maybe that's worth it. Ask the question out loud at least once a year.
This is a pricing problem and it's usually the one owners find most surprising, because nothing on a P&L will ever show it to you. Money you never billed isn't an expense. It builds a hundred dollars at a time through renewals nobody wanted to fight over, and it compounds, because next year's renewal starts from this year's soft number.
You're buying occupancy with rent. Sometimes that's the correct trade and sometimes it's a habit from a lease-up that nobody ever turned off. The tell is whether concessions are still running in your strongest leasing months.
This is a collections problem and it's the one that gets worse the longer you look away. A resident one month behind usually catches up. A resident three months behind almost never does, and by then you've also lost the eviction timeline you would have wanted.
The same six numbers, pulled from your rent roll automatically and delivered as a one-page report before your Monday morning starts. Written by software, checked by an operator, sent whether or not there's bad news.
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This calculator tells you the size of the leak. The guides are how you automate finding it every week instead of once.
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