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May 31, 2024
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What do you mean by "manipulate"?
^. You would only need rent roll ever for occupancy, lease expirations (if you model out monthly instead of annually and get super granular) and the spread between current leases and market rent for market rent upside assumptions. Can't imagine anything else you could "manipulate" out of RR from an underwriting perspective.
This isn't a "gotcha!" because you have no reason to know it, but certain municipalities (for example NYC) have strict rent control/stabilization laws, so knowing when leases turn over can actually be hugely important to validating assumptions. If I sign a 2 year lease in September, and you're assuming 3% rent increases annually... you're going to miss your assumptions by a fair bit (well, 3% to be exact). Also a full rent roll should give you the legal status of each unit instead of just a rolled up "gross potential rent" line.
Recent leases vs. market (usually last 5-10 depending on size of property) overall and by floor plan, occupancy by floor plan, renovation status, etc.
I agree that it's mostly what you said, but there's a lot of good data you can get out of a RR. Especially if they happen to leave tenant balances on there that you can compare against the AR report.
This guy rent rolls.
To add my $0.02, for our UW we look at in-place by unit line, market by unit line, LTL, last 50 leases rate (across all unit lines), last 25 leases rate (all unit lines), move-in pace/tenant vintage (each unit line and aggregate), upcoming expirations, weighted average rate by move-in months (both chunk and PSF), tenant balances (when available) and occupancy. Includes graphs on some of the items.
We don't use RedIQ or anything similar.
Also check to see if there are model units not mentioned in the package, check out the L90, L60, and L30 lease rates to see where rents are trending, see what % of the RR is leased to corporate units, check if any units are below market rent or rent controlled etc. LOTS of stuff in the RR. Some good tips above I hadnt thought of.
OP if you DM me I can share a RR analysis model I made but honestly given the different formatting of RRs its not a one size fits all situation. Good time to practice your modeling chops.
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