What Is Gross Potential Rent (GPR) for an Apartment Building?
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Gross potential rent (GPR) is the rent an apartment building would collect in a year if every unit were leased at its market rent for all twelve months, with no vacancy, no concessions and no unpaid rent. It is a ceiling, not a forecast: the rent you actually collect is always lower.
How do you calculate GPR?
Take each unit type's market rent, multiply by the number of units and by 12, and add the results.
| Unit type | Units | Market rent | Yearly GPR |
|---|---|---|---|
| 1 bed | 20 | $1,200 | $288,000 |
| 2 bed | 20 | $1,400 | $336,000 |
| Total | 40 | $624,000 |
These numbers are hypothetical.
How is GPR different from in-place rent and collected rent?
- Gross potential rent: every unit at market rent, full year.
- Scheduled (in-place) rent: what current leases say, for occupied and vacant units at their last rent. The gap from GPR is loss to lease.
- Collected rent: what actually came in after vacancy and credit loss and concessions.
Some sellers and lenders label in-place rent as GPR. Ask which one a pro forma uses before you compare deals.
What mistakes inflate GPR?
- Market rents taken from the best renovated unit and applied to every unit.
- Counting down units or a model unit as if they rent.
- Using asking rents from listings instead of signed leases. See the rent roll and T12 and economic versus physical occupancy.
How DoorRaise fits in
DoorRaise helps sponsors raise equity for apartment buildings from their friends and followers under Rule 506(b) or 506(c), and verifies that every investor is accredited before they sign, in both. Investors fund by wire into the deal's escrow account at Enterprise Bank & Trust. Sponsors pay a $1,500 setup fee (non-refundable) and a flat $5,000 a year administration fee; see pricing.
FAQ
Is gross potential rent the same as gross income?
No. Gross income usually means what was collected, plus other income. GPR is the theoretical maximum rent.
Does GPR include other income like parking or fees?
No. Other income is added separately when you build effective gross income.
Should GPR use current or future market rents?
For today's value, current market rents. A pro forma may grow them, with the assumption shown.
Sources
This article is general information, not legal, tax or investment advice. Talk to your own CPA and attorney about your deal. DoorRaise is not a law firm, broker-dealer, investment adviser or funding portal.