In commercial multifamily real estate, there’s a language that is spoken when you are connecting with brokers, property managers and other investors in the profession. To avoid sounding like a novice, an investor must be fluent with the real estate terminology to be taken seriously. Let’s take a minute to breakdown one of those terms.
Loss to lease (LtL) is the amount of actual revenue lost that is calculated on the basis of the market rent and actual rent. LtL is derived by deducting the actual rent collected from the Gross potential rent and dividing the total by the gross potential rent.
- For instance, a 200-unit apartment community with a GPR of $189,400 and with an actual rent of $169,400 has a LtL of 10.5%.
By learning these concepts and terms, you’re separating yourself from the novice investor looking to be more active than passive. Here’s where you can learn more multifamily investing terms.