The Fatal Problem With Multifamily Rent Comparable Analysis: Are You Comparing the Right Numbers?

Current Rents:

The most recent lease agreements signed for the unit type. It's what rents are actually agreed upon from the most recent basis.

Market Rent:

The rental amount the property is marketed at. It is not what is actually agreed upon in the lease agreement, nor is it what the market suggests the rent amount should be.

In a standard comparable rent analysis, you typically use the current rents for the subject property.

The problem I found with gathering data about comparable properties is that the rents you find are actually market rents, not current rent.

The problem this creates is that market rents can be different than what you can actually get. For instance, market rents could be $200 more on one property than another comparable property. They could still lease units at this higher rent if they give out an incentive like the second month rent is free.

Conclusion:

Unfortunately it is difficult to get conclusive information in a rent comparable analysis that directly relates to the subject property. It can give you a rough idea of what rents you can charge, but there will ultimately still be an element of uncertainty. The market rents are only the top line number and don't give you the whole story.