How to Read a Rent Roll

How to Read a Rent Roll

Here are eight ways to read a rent roll with an eye towards determining stability of the tenant base.  The objective is to provide insight into the stability of the asset by knowing the financial reality associated with the income stream from the multifamily asset.

Baseline Data.  When beginning a review of the rent roll ask for two copies; one for the current month and one for the same month from the previous year (two years if you can get it). Our objective is to obtain a baseline; to determine those tenants that are on the rent roll in the current month and those removed. 

Turnover.  While a nice catch phase, in our business increases in turnover means we are burning cash.  With the baseline data we can now determine turnover and inquire about the fate of those tenants no longer on the roll.  What became of them?   

Revenue and Revenue Growth (Rent Growth).  Minus the layered view of revenue including Gross Potential, less vacant, less concessions, plus utility income, plus garages... yada yada.  How much RENTAL REVENUE was obtained  for the current month versus for the same month one and two years previous? 

Renewals and renewal rates. Renewals are the cornerstone to stability.  What is the year-over-year renewal rate?  A number north of 75% is very good.  High renewal rates converts to a low turnover rate.  Low turnover converts to high gross margins and less turnover expenditures.

Lease Start dates/Lease end dates.  This is separate and distinct from renewals.  This category says much about the potential of un-locking value.  What is the average length of tenancy?   Is it 12 months or 12 years?   Nationally, turnover is fifty percent annually. 

Collections Activity.  Collections refers to only collections of rent- not any other category.  We are focused only on the rent roll.  What percentage of rents are collected as of the first of the month?  What is this percentage as of the second and third of the month?  

Late fee revenue.   Late fees can be an indicator of  future collections.  This revenue is a mechanism  to enforce timely payment of rent.  The real target inquiry is to determine the quality of the under-lying tenant base.  Once late fees becomes consistently high, say, more than three percent of annual revenue, it becomes a red flag requiring deeper investigation. 

Evictions Activity.  Per the rent roll, how many evictions  were performed in the last few years?  What was the end result on each one; voluntary move once served  or  action necessitating legal fees?   What was the cost to turnover evicted units?

Can you add to this list?  Please let us know through your comments.  Thanks!

About This Blog
Multifamily Insight is dedicated to assisting current and future multifamily property owners, operators and investors in executing specific tasks that allow multifamily assets to operate at their highest level of efficiency. We discuss real world issues in multifamily property management and acquisitions. This blog is intended to be informational only and does not provide legal, financial or accounting advice. Seek professional counsel.  For more information, visit:

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