Unit Mix Analysis for Apartment Underwriting
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A unit mix analysis breaks an apartment building into its unit types, such as studios, one-bedrooms and two-bedrooms, and lists the count, average size and average rent of each. It shows where the income comes from, how rent per square foot compares across types and whether the mix matches what local renters want. It is one of the first tables in a rent roll review, and sponsors who raise capital with DoorRaise should be ready to explain it to investors.
This post shows how to build the table, what to read in it and a hypothetical example. It extends our rent roll and T-12 guide.
How do you build the table?
- List every unit from the rent roll with its type, size and current rent.
- Group by type: studio, one-bedroom, two-bedroom, three-bedroom.
- For each type, count units, average square feet, average rent and market rent.
- Divide rent by square feet for rent per square foot.
- Add totals and a weighted average for the building.
A hypothetical example
This example is hypothetical, for illustration only. A 36-unit building has three types.
| Type | Units | Share | Square feet each | Rent each | Rent per square foot |
|---|---|---|---|---|---|
| Studio | 12 | 33% | 450 | $850 | $1.89 |
| One-bedroom | 16 | 44% | 650 | $1,000 | $1.54 |
| Two-bedroom | 8 | 22% | 900 | $1,300 | $1.44 |
| Total | 36 | 100% | 23,000 in all | $36,600 a month in all | $1.59 |
Monthly rent is 12 x $850 + 16 x $1,000 + 8 x $1,300 = $36,600, or $439,200 a year. Total area is 5,400 + 10,400 + 7,200 = 23,000 square feet, so the building averages about $1.59 per square foot a month. Shares add to 99% in the table because of rounding.
Notice that studios earn the most per square foot but the least per unit: they are a third of the units but only about 28% of the rent. Two-bedrooms are 22% of the units and about 28% of the rent. If studios are the weakest type in local demand, vacancy would hit the units with the highest rent per square foot first.
What should you look for?
- Concentration. Which type is most of the income? A building that depends on one type is exposed to that segment of the market.
- Fit with the market. Compare the mix with local household sizes and what rent comps show. Our market research sources list free data.
- Rent gaps by type. A type with more loss to lease than the others may be the first target.
- Renovation priorities. Spend where the rent premium per dollar is greatest. See the renovation budget.
- Parking and amenities. More bedrooms usually mean more cars and more demand on parking.
- Square footage accuracy. Measure a sample of units. Listed square footage is sometimes wrong.
Can you change the mix?
Combining or splitting units can change the count and rent, but it needs permits, may affect the certificate of occupancy and the loan, and takes units offline during work. Model it as a separate project with its own cost and timeline.
How DoorRaise fits in
DoorRaise helps sponsors raise equity for apartment buildings with 5 or more units under Rule 506(b) or 506(c). It prepares the offering documents from the sponsor's inputs, coordinates escrow with Enterprise Bank & Trust, collects investor funds by wire only and handles filings. The deal page lets you show investors the unit mix and the plan for it. DoorRaise does not verify a seller's or a sponsor's numbers; sponsors must check what they present.
DoorRaise is for apartment buildings with 5 or more units, and sponsors can launch their deal here. Setup is $1,500 (non-refundable), and the administration fee is $5,000 a year from closing.
To get started, create your sponsor page or see the fees.
FAQ
What is a unit mix?
It is the number of each type of apartment in a building, such as studios, one-bedrooms and two-bedrooms.
Why does rent per square foot matter?
It lets you compare unit types and buildings of different sizes on one basis.
Why do studios have a higher rent per square foot?
Smaller units usually rent for less in total but more per square foot. Compare each type to the same type elsewhere.
What is a weighted average rent?
It is total rent divided by total units, which accounts for how many units are of each type.
Where do I find the unit mix?
In the rent roll, and in the offering memorandum, which should be checked against it.
Sources
This article is general information, not legal, tax or investment advice. Talk to a securities attorney and a CPA about your deal. DoorRaise is not a law firm, broker-dealer, investment adviser or funding portal.