Multifamily Concessions Impact Calculator

Concessions disguise effective rent — quantify net effective rent and concession amortization.

Face rent / month

Concession months

Lease term months

Units with concession

Net effective rent

$1,925

Effective discount %

0.1%

Annual concession cost

$63,000

How the math works

Net effective rent = face rent × (term − concession) / term.

$2,100 × (12 − 1)/12 = $1,925 net effective. 30 units × $2,100 = $63k annual concession.

How to Use

Enter face rent / month.
Enter concession months.
Enter lease term months.
Enter units with concession.
Read net effective rent.

Frequently Asked Questions

Concession structures?

Most common: 1 month free on 12-month lease = ~8.3% effective discount. Two months free on 13-month: 15.4%. Reduced rent first 3 months (rare): more cash to resident, higher carrying cost. Up-front (rare): high cash burn for operator. Standard reporting: face rent vs net effective rent. Concession amortization: spread over lease term in NOI for stabilized vs treat as one-time for lease-up. Lease-up: concessions burn off as occupancy stabilizes.

How does this support multifamily underwriting?

Multifamily acquisition and operations teams use this calculator alongside rent roll, T-12 P&L, expense ratio benchmarks, and comp set rents. Pair with a unit-level upside model and concession reconciliation. Sensitivity testing on rent growth, expense growth, and exit cap is essential — small changes compound on stabilized NOI and IRR.

Class A vs B vs C variance?

Class A: newer construction, premium amenities, higher rents but lower yield, lower expense ratio (~35–45%). Class B: 1990s–2000s build, value-add target, mid yield, expense ratio 40–50%. Class C: 1970s–1980s, deep value-add or workforce, higher yield but higher expense ratio (45–60%) and capex burden. Adjust assumptions to class.

When does this metric actually move the deal?

Single-line items rarely change a deal materially, but stacked operational improvements compound. A 3% rent increase + 1.5% expense reduction + 50 bps cap compression = 25–40% IRR uplift over 5 years. Use this calculator alongside others in the operations stack to identify the best 3–5 levers to focus on post-close.