Affordable Rent Gap Calculator

Affordable rent restrictions reduce NOI vs market-rate alternative.

Unit count

Affordable rent / mo

Market rent / mo

Occupancy %

Restriction years

Annual rent gap

$1,254,000

Cumulative gap (no growth)

$37,620,000

Gap per unit / yr

$12,540

How the math works

Monthly gap = (market − affordable) × units × occupancy. Annual × 12. Cumulative × years.

($2,500 − $1,400) × 100 × 95% × 12 = $1.254M annual × 30 = $37.6M cumulative (no growth).

How to Use

Enter unit count.
Enter affordable rent / mo.
Enter market rent / mo.
Enter occupancy %.
Enter restriction years.
Read cumulative rent gap.

Frequently Asked Questions

Why is there a rent gap?

Affordable units rent below market to qualify for LIHTC, tax-exempt bonds, or inclusionary zoning. Tenants must meet income restrictions; rents capped based on AMI (not market). Typical gap: market $2,500/unit/mo vs affordable 60% AMI $1,400 = $1,100/mo gap per unit. Over 200-unit property: $264k/mo × 12 = $3.2M/yr rent gap. Compound over 30-year restriction = ~$100M lost rent NPV.

What offsets the gap?

LIHTC credits (worth 70-90% of project eligible basis). Tax-exempt bond financing (typically 100 bps below taxable). Low-cost soft debt (city HOME funds, state housing trust). Property tax abatement (often 25-80% off for 25-40 years). Fees waived (impact, hookup, permit). Combined: can offset 40-70% of restricted rent gap. Still negative cash flow typically — need all sources aligned.

Restriction period?

LIHTC: 15 years regulatory + 15 years extended use = 30 years minimum. Tax-exempt bonds: life of bonds (typically 30-35 years). HUD 221(d)(4): 40 years. Inclusionary zoning: varies 30-99 years. State/city trust fund: 30-55 years. Longer restriction = more subsidy but less flexibility. Mixed project might have multiple overlapping restriction periods — complex compliance.

Unrestricted exit?

After restriction period, property can convert to market. LIHTC: optional conversion after year 15 via 'Year 15' tenant qualification process; extended use limits how aggressive. Tax-exempt bonds: refinance at maturity. Inclusionary: usually permanent. Many sponsors never convert because: (1) restriction tenants are stable, (2) subsidy continues, (3) reputation value, (4) legal complexity. Mixed-income conversions common.