Lease Charges vs Market Rent Listed in Rent Roll

Rental Property Investor · Washington, Washington D.C. · Member since 2013 · 40 posts · 6 votes

Hey everyone, I just received a rent roll from an apartment building I've been working on. The property managers have one column labeled 'Market Rent' with a dollar figure of $12,538.00 and a column labeled 'Lease Charges' with a dollar figure of $11,585.00.

Can someone more experienced than I tell me what the difference is between the two? I'm trying to figure out EXACTLY how much is collected in rents every month.

Thanks everyone!

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Matt Clark

Roanoke, VA · Member since 2014 · 404 posts · 203 votes

@Jacob Chaney the “Lease Charges” column is the actual rent charged. The “Market Rent” column is what the management company considers fair market rent, and there are many different ways that market rent is determined. In most cases it’s a somewhat arbitrary number, not based on any real equation.

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Bjorn AhlbladPro Member
Investor · Shelton, WA · Member since 2017 · 6k+ posts · 6k+ votes
6y
@Jacob Chaney I have not seen 'Market Rent' in a column on a rent roll before. Looks like 11,585. is income.
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Matt Clark
Roanoke, VA · Member since 2014 · 404 posts · 203 votes
6y
@Jacob Chaney the “Lease Charges” column is the actual rent charged. The “Market Rent” column is what the management company considers fair market rent, and there are many different ways that market rent is determined. In most cases it’s a somewhat arbitrary number, not based on any real equation.
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Jacob Chaney
OP
Rental Property Investor · Washington, Washington D.C. · Member since 2013 · 40 posts · 6 votes
6y
@Matt Clark: Thank you! This is what I suspected but I wanted to get confirmation from another source. I have never heard rent collected referred to as Lease Charges. I thought you would just call it rental income. For some reason they track their market rents next to their Lease Charges. See attached graphic:

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Jacob Chaney
OP
Rental Property Investor · Washington, Washington D.C. · Member since 2013 · 40 posts · 6 votes
6y
Also thanks for your input @Bjorn Ahlblad.
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Brandon Wells
Property Manager · Indianapolis, IN · Member since 2018 · 136 posts · 71 votes
6y
@Jacob Chaney Typically that 1st number is your Gross Potential Rent (All units at Market Rate) and the second number is what is actually being received. The difference being your "Loss-to-Lease".
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Anthony Wick
Rental Property Investor · Ankeny, IA · Member since 2017 · 2k+ posts · 3k+ votes
6y
That's some fancy verbiage! But alas, it appears to be a marketing ploy. Kind of like Pro Forma. It's cute that they think the rents could be higher, but they aren't. You should label your offer; "Potential Offer", and "Actual Offer".
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Tj Hines
Specialist · Tampa, FL · Member since 2012 · 933 posts · 492 votes
6y
@Jacob Chaney very simple! Market rents is what the market is currently demanding for rents and lease charges is what the property is actually getting.

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Jacob Chaney
OP
Rental Property Investor · Washington, Washington D.C. · Member since 2013 · 40 posts · 6 votes
6y
@Tj Hines @Anthony Wick @Brandon Wells Thank you gentlemen. I really appreciate the help. I had never seen the two displayed side by side but there are some "affordable" housing units in the property so maybe it's a way they keep track of market rent vs what they are actually receiving. It was helpful to confirm for me what I believed to be the right figure to look at.
Cheers!
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Laura Janosko
Rental Property Investor · Cleveland, OH · Member since 2014 · 51 posts · 37 votes
6y
If there are truly affordable rents at the property, the owner cannot charge or collect the market rents. There may be a restriction on the property deed or a land use agreement that restricts units to the maximum allowable rents as determined by HUD. If you send me the location and a description of the restrictions, I can help determine what the maximum allowable rent would be. It's not common to sell affordable apartments, so the original restrictions may have expired or may have been self imposed. Definitely check all of the paper work first though.
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