Effective Rent

Glossary

Effective rent shows average monthly rent after concessions, helping multifamily teams compare pricing and revenue impact.

Definition

Effective rent is the average rent for a lease after concessions are spread across the lease term. It differs from the stated monthly rent because it accounts for incentives such as free rent. In multifamily operations, it helps teams compare lease value more accurately than face rent alone.

Example

A unit is leased at $2,000 per month for 12 months with one month free. The effective rent is ($2,000 × 12 - $2,000) ÷ 12 = $1,833.33 per month.

Why It Matters?

Effective rent helps operations leaders see the real revenue impact of pricing decisions and concessions. It supports clearer comparisons across renewals, new leases, floor plans, and properties, especially when stated rents look similar but concession packages differ.

‹ Effective Gross Income

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