Deal Analysis
Reading a Rent Roll Before You Buy a Small Multifamily
Contract rent versus market rent, lease expiration clustering, and deposit reconciliation tell you what the seller is not saying.
Compare contract rent to market rent
Ask for the rent roll and pull your own comparables. If contract rents are above market, expect turnover to reduce income. If they are below market, the seller is leaving money on the table and you should underwrite to current contract rent, not the pro forma upside.
Map lease expirations
If four of six leases expire within 60 days of closing, you are buying a vacancy event. Stagger renewals in the first year so no single month exposes you to multiple simultaneous turns.
Reconcile deposits
Confirm every deposit on the rent roll is actually held in a separate account and transfers to you at closing. Missing or commingled deposits become your liability the day you own the building.
Key takeaways
- Underwrite to contract rent, not pro forma upside.
- Stagger lease expirations in the first year.
- Verify deposits are held and transfer at closing.
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Rental Property Lab Editorial Team
Rental Property Lab Editorial Team creates practical educational resources, calculators, comparisons, and guides for rental property owners. Our content focuses on rental management, maintenance, improvements, products, and property financial analysis.
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