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Market Rent vs In-Place Rent Calculator
The gap between market rent and in-place rent is the single largest value-add lever in multifamily and rent-controlled commercial. This calculator sizes the monthly and annual gap, shows how much you recapture per year given turnover, and converts the full gap into value creation at market cap rate — the number underwriters call 'loss to lease' or 'mark to market.'
Annual loss-to-lease (full gap)
$110,400
Value creation at cap rate
$2,007,273
Gap per unit per month
$230
Gap as % of in-place
14.2%
Year-1 NOI lift at turnover
$44,160
How the math works
Market rent minus in-place rent = loss to lease. The full gap is the NOI ceiling if every unit turned to market today. Annual capture depends on turnover — at 40% turnover, you recapture 40% of the gap each year until fully stabilized.
Value creation = full annual gap ÷ cap rate. This is the potential value-add reward for bringing in-place rents to market — assuming no market movement.
How to Use
- Enter market rent from comps and in-place rent from the rent roll.
- Enter total units and annual turnover rate.
- Enter the market cap rate for value creation math.
- Read the annual loss-to-lease, per-unit gap, and value uplift.
Frequently Asked Questions
Why does turnover matter?
You can only push rents on lease turn. If turnover is 40%, you capture 40% of the full gap in year one. Rent control or long-term leases stretch this over many years.
Value creation math?
Annual rent gap ÷ cap rate = value. A $100K annual gap at a 5% cap rate = $2M of value creation. This is the prize for taking on a value-add deal.
Is loss to lease always capturable?
No — some markets have hard rent caps (CA AB1482, NYC stabilized) that limit how fast you can close the gap. Always check local limits before underwriting full mark-to-market.
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