How leasing impacts acquisitions

“Hey Jacob. What did we get for the last 2/1 we rented at X?”

I think I ask that question of Jacob, who runs our management business, 4-5 times per week.


Because we’re constantly recycling the market information we glean from leasing back into our acquisitions underwriting.

The go/no go decision on each deal is sensitive to small ($100-200 / month) swings in the forecast rents. Across, say, a 10 unit building, a change of $100 / month / unit causes a budget swing of ~$120k ($100 x 10 units x 12 months x 10 GRM = $120k). That’s material.

Does this mean our rent forecasts are always right? Of course not… there’s a 9-12 month delay between when we buy a building and when it’s ready to be leased up again. And lots can happen in that much time.

But we need to use every tool at our disposal.