What is Rent Roll Analysis?

There is a method to performing rent roll analysis that allows for all the steps to be covered.  Miss one step and there is a dramatic “hole” in your outcomes.  Rent roll analysis is not hard, however, it does require a methodical tenacity to get it right.

Rent roll analysis concludes with having validated the in-place rental income as being true based on a review of records that can tie income perceived with income received.

What is rent roll analysis?

Rent Roll Analysis is determining the validity, or reliability, of rental revenue collected from income property

Rent roll analysis is the first step in assessing an income producing real estate asset. Getting this right is imperative as this number affects every other number in the financial analysis that follows.

The best of all worlds is when buyer and seller can agree on the method of measuring rental income, when both are on the same page.

A rent roll refers to the amount of rent due from each property. In pre-revolutionary America, these properties were almost exclusively agricultural lands “rented” in exchange for a percentage of crops produced.  In other contracts, the rent was a flat fee paid to the land owner.

Use of the  rent roll today is standard operating procedure for multifamily owners and operators. They provide a wealth of operating information that assist in managing the business of rental property.

A rent roll is more than an electronic page with names and amounts.  Larger concerns can aggregate this data for review creating proprietary knowledge specific to their portfolio.  The convergence of low-costs computing power and big data are making this possible.

Rent roll analysis, while perceived as “low tech” can be utilized to create new knowledge. This is the premise of the concepts presented in “How To Read A Rent Roll” and use of the Rent Roll Triangle (r).

This article is intended to be informational only and does not provide legal, financial or accounting advice. See http://multifamilyinsight.com. Multifamily Insight.

Add Comment