Multifamily loss to lease is the gap between supported market rent and contract rent on occupied apartments. A positive gap represents potential additional rent. How much becomes cash, and when, depends on lease terms, rent restrictions and the costs of securing higher rents. Equity Residential’s definition connects the measure to repricing as existing leases expire.

Calculate multifamily loss to lease on one rent basis

Here, we compare monthly face rents—the stated rents before concessions—and show below-market rent as a positive loss:

Monthly loss to lease = supported market rent for occupied units − contract rent for those same units.

Add the unit-level differences, including negative amounts for above-market leases. Keep vacant apartments outside this occupied-lease comparison; their missing income belongs in vacancy.

Suppose eight occupied apartments each have a $1,200 monthly contract rent and a supported $1,400 monthly market rent. Their gap is $1,600 per month, or $19,200 annualized. Using market rent as the denominator, loss to lease is 14.3%: $1,600 ÷ $11,200. Label the denominator whenever presenting a percentage.

Multiplying by 12 expresses the current gap at an annual rate. It does not establish when an owner can collect it. Keep any forecast of future market-rent growth separate from capturing today’s gap.

Support market rent before counting the gap

Start with recent signed new leases and renewals at the property, then examine competing apartments. Record each observation’s date, floor plan, condition, lease term, utilities, fees and concessions. A renovated apartment is weak evidence for an unrenovated unit unless the model also funds and schedules the work.

Fannie Mae’s August 2026 appraisal instructions require at least four rental comparables, adjustments for relevant differences, and an explanation when estimated rents differ from recent leasing at the property. An asking-rent screenshot alone does not meet that standard.

Concessions also change the comparison. In a separate hypothetical offer, $1,400 monthly rent with one month free on a 12-month lease averages $1,283.33 per month before other charges. Compare face rents and show concessions separately, or compare effective rents consistently. Do not deduct an incentive again after using a rent already reduced for it.

Build a lease expiration revenue forecast

Continue the eight-unit example over a hypothetical January–December Year 1. Assume market rents stay flat, existing leases have no interim increases, and two leases expire each quarter. Initially assume every resident renews immediately at $1,400, with all required notices and legal conditions satisfied.

Each row equals units × $200 monthly increase × eligible months. Timing alone limits the first-year scheduled increase to 37.5% of the $19,200 annualized gap. This is an illustration, not a prediction.

Now assume a binding restriction limits one July renewal to $1,250 for the rest of Year 1. That removes $900 from the schedule: ($1,400 − $1,250) × six months. The permitted scheduled increase becomes $6,300. The hypothetical ceiling does not represent any particular jurisdiction’s law.

An unrestricted market comparison cannot establish permission to charge that rent. Fannie Mae’s affordable-housing income rules expressly account for program limits and restrictive covenants. Have local counsel confirm the property’s lease, notice and rent restrictions before relying on repricing dates.

Separate concessions, vacancy and collection losses

The schedule establishes when higher rent could be charged. To estimate collections, account for interruptions and deductions separately.

Assume the other July apartment becomes vacant on July 1 and is leased on August 1 at $1,400. Its new tenant receives a $700 concession in August. Across the property, another $360 of billed rent proves uncollectible; all other rent due is paid within Year 1. This illustration deducts concessions when used and assumes no other payment-timing differences.

The vacancy deduction is $1,400 because the preceding schedule included July at that amount. If your model instead leaves July’s rent blank and starts the new lease in August, do not subtract that vacancy a second time.

Vacancy means an empty unit; a concession is an agreed incentive; bad debt is rent owed but deemed uncollectible. Fannie Mae’s operations definitions keep these deductions separate. For the operating-statement reconciliation, see scheduled rent versus collected cash.

Against the fully occupied, full-collection baseline at unchanged rents, this case produces $3,840 more rental cash. Assume cleaning and painting the vacated apartment also costs $1,000. After that expense, $2,840 remains above the baseline. Other operating costs, capital work and debt service remain outside the calculation, so this is not net operating income or an investment return.

The turned apartment shows why a higher contract rent can still leave less cash in the first year. July–December rent collected is $6,300: five months at $1,400, less the $700 concession. A resident who renewed and paid $1,200 for all six months would have generated $7,200, before considering the avoided turnover expense.

Why a lender may recognize less income

An acquisition model and a lender can start with different rent definitions. Fannie Mae’s guide effective September 28, 2026, in its conventional-loan table, starts with actual rents for occupied units plus market rents for vacant units, annualized. Specified non-revenue-unit adjustments then produce gross potential rent. The occupied-unit rent gap is already reflected in that starting point; subtracting it again would double-count it.

The same table sets the combined vacancy, concessions and bad-debt deduction at the greater of the shortfall from gross potential rent to annualized trailing-three-month net rental collections, or 5% of gross potential rent. That is a combined test, not three separate 5% deductions. The table also calls for analysis of collection trends: its stated conditions permit supported adjustments for stable or increasing collections and require adjustments for specified declines.

Program differences matter. The Small Mortgage Loan table generally uses the lower of actual or market rent for occupied units, plus market rent for vacant units, with specific exceptions and different deduction requirements. Proposed rent increases in an acquisition model therefore do not automatically become lender-recognized income.

For a multifamily acquisition, ask the lender to reconcile its rent base and deductions with your rental revenue assumptions. Price the proposed upside using the months and costs required to obtain it.