“The rent roll said $900K in income. The T12 showed $950K. What is going on?”
That is the question I had while reviewing a $7.5MM, 50-unit deal. Turns out – 10 units had concessions, 5 tenants were past due, and 15 leases were rolling in the next six months. On paper, the deal looked strong. But the rent roll told a different story.
For new investors, understanding how to read a rent roll is not just a technical skill – it is a risk mitigation tool. I have reviewed hundreds of rent rolls over my career, and they remain one of the most misunderstood documents in multifamily underwriting.
Here is how to change that.
What Is a Rent Roll And Why It Matters
A rent roll is essentially the “heartbeat” of a multifamily property. It shows how many units are occupied, who is paying, how much, when their lease ends, and more. But beyond the basics, it is a diagnostic tool to assess the stability, lease risk, and true income potential of a property.
8 Must-Ask Questions When Reviewing a Rent Roll
- Does total rent match the T12 gross rent?
A mismatch may reveal concessions or unpaid rents – not a simple oversight. - Are there any tenant concentrations?
Over-reliance on one employer, company, or tenant type increases your risk exposure. - How stable is the tenant base?
Long-term tenants = low turnover risk. Frequent turnover? That is a red flag. - What is the lease rollover risk?
If 30% of leases expire in the next 3 months, your future income is not guaranteed. - Are new leases trending up or down?
Compare new lease rents to existing ones and to market. Declining trends can hurt your NOI. - What is the trade-up/trade-down trend?
Are renewals happening at higher or lower rents? This shows market sentiment and retention quality. - Are there delinquencies?
“Occupied” does not always mean “paying.” Check for unpaid balances. - Are security deposits sufficient?
Weak deposits may indicate weak screening or lower tenant quality.
Pitfalls to Avoid
- Taking stated rents at face value
- Ignoring lease expirations
- Overlooking hidden concessions
- Assuming rent growth without data
- Not cross-checking with T12 or bank statements
Even experienced investors slip when they treat the rent roll like a formality. It is not – it is a source of truth when used correctly.
Actionable Takeaways
Next time you analyze a rent roll, remember to:
- Cross-check rent roll income with financials (T12, ledgers)
- Look for patterns in lease expirations and tenant turnover
- Scrutinize concessions and past-due amounts
- Validate whether new leases reflect market trends
The Bottom Line
If you are new to multifamily investing, mastering rent roll analysis will set you apart. It is not just about collecting data – it is about interpreting risk.
Vessi Kapoulian,
Breaking down multifmaily underwriting one step at a time to create educated and empowered investors
PS: Want a copy of the Rent Roll Analysis Guide? DM me on LinkedIn and I will send you a copy.
And if you are ready to do a deeper dive and learn how to analyze deals on your own from beginning to end with confidence and ease, DM me on LinkedIn how to get started today.