How to Read a Rent Roll Before Buying a Small Multifamily Property

A rent roll is the line-by-line list of who lives in the building, what each unit rents for, when each lease ends, and what each tenant owes. It is the single document that decides whether a small multifamily deal is worth its asking price, because every dollar of value in a rental building traces back to a lease. A pro forma is a projection; a rent roll is a record. The record wins. The gap between the two is where deals are made and lost. Sellers present a pro forma built on market rents — what units could rent for. The rent roll shows what they actually rent for today, minus concessions, minus delinquencies, minus the units sitting empty. To read one well is to look at it carefully so as to understand its meaning, which is close to how Dictionary.com defines the verb: scrutiny first, interpretation second. This piece walks through the audit in the order that matters: unit count and rents first, lease expirations second, then concessions, below-market units, and delinquencies.

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