What Is Loss to Lease?
Answer
Loss to lease is the gap between a unit’s current in-place rent and its market rent. If a unit leased at $1,300 could rent for $1,450 today, the $150 difference is loss to lease: a value-add operator’s roadmap for raising income as leases renew.
High loss to lease can signal embedded upside: rents that have lagged the market and can be brought up over time, or through renovation, as units turn. It is a key input when underwriting a value-add business plan.
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