How to read a rent roll

General information, not tax or legal advice. Every deal is different. Talk to your lawyer and accountant before you act on anything here.

What it should show

• Each unit and its area.
• The tenant’s name.
• Lease start and expiry dates.
• Base rent, and any scheduled increases.
• Additional rent or recoveries the tenant pays.
• Renewal options and any other rights, like a right of first refusal or option to purchase.
• Security deposits held.
• Vacant units, shown as vacant.

Check it against the leases

Read every lease, including amendments, and match each line. Rent, dates, area and options should agree. Get signed copies. Watch for rights that bind a new owner, such as an option to purchase or a right of first refusal, and for leases over three years that may be registered on title. Then ask each tenant to confirm their lease in an estoppel certificate.

Check it against the money

A full rent roll doesn’t prove everyone pays. Compare each month’s rent roll with the income actually received that month. The gap is your true vacancy and collection loss, and it catches free rent and slow payers. Security deposits belong to the tenants and aren’t income.

Map the expiries

Lay out when each lease ends. If a big share expires in the same year, the income is at risk, and lenders and future buyers will see it the same way. A lease near its end with no renewal option is worth less than its rent suggests. For the big tenants, think through the case where they leave.

Ask what’s missing

Rent rolls leave out costs. Pair it with the operating statements and ask about management, vacancy, reserves and repairs the owner does himself. I rebuild the income from these documents with you before we talk price.

Questions people ask

Who prepares the rent roll?

The seller or their property manager. Because it’s a summary, treat it as a starting point and verify it against the leases, the bank records and the tenants’ estoppels.

Is a rent roll enough for a lender?

No. Lenders usually want the leases, operating statements and often estoppels too. The rent roll helps them see the picture quickly.