Loss to lease

Loss to lease measures how far a property's in-place rents lag the market. If a unit would rent for $1,600 today but the current lease says $1,450, that unit carries $150 a month of loss to lease. Sum it across every unit and you have a number that shows up on multifamily income statements right below gross potential rent — income the property is entitled to at market but has contractually given up until leases roll.

For buyers, loss to lease is opportunity dressed as a deficiency: it quantifies the upside available through normal renewals without any renovation. For operators, it is a discipline check on renewal pricing — small, regular increases keep the gap narrow, while years of flat renewals let it compound until closing it requires increases large enough to drive turnover. The honest read requires a defensible market-rent figure, which is where fresh rental comps come in.