Rent Roll Analysis

A rent roll is the closest thing a replacement property has to a bill of materials. Every line names a tenant, a rate, a start date, and an obligation, and the analysis has to test whether that stated income actually supports the exchange before an offer goes out, not after closing.

Reading Lease Dates Against the Hold Period

A rent roll showing 95 percent occupancy means little if six leases covering 40 percent of the square footage expire inside the first eighteen months of ownership. The analysis has to sort every lease by expiration date and stack them against the exchanger's intended hold period, because a rollover concentration that looks fine on a single-page summary can look very different laid out month by month.

A month-by-month expiration chart, rather than a single rollover percentage figure, shows an investor exactly which quarter carries the heaviest re-leasing workload, which matters for staffing and budgeting a leasing effort well before that quarter actually arrives.

Concessions and Collections: Where Stated Rent Diverges from Real Rent

Free-rent months, reduced base rent during a build-out period, and percentage-rent adjustments all reduce effective rent below the number quoted on the rent roll's face. Detroit multifamily and retail buildings coming out of a lease-up or turnaround period often carry several of these concessions at once, and the analysis needs to net them out before comparing the building's income to the relinquished property's sale proceeds.

Collection history matters just as much: a rent roll showing 98 percent billed occupancy but 88 percent collected over the trailing twelve months is describing two different buildings, and the exchange budget should be built on the collected figure.

Asset-Class Differences Across the Metro

Multifamily rent rolls in Royal Oak and Ferndale run monthly terms with turnover as the main variable; retail rent rolls along the mile-road corridors run multi-year terms with percentage-rent clauses and CAM reconciliations layered in; medical office rolls in the New Center and Southfield corridors carry tenant-improvement amortization tied to specific lease terms; industrial rent rolls along the I-94 and I-75 corridors often run triple-net with fewer line items but larger dollar amounts per tenant. Each asset class needs its own reading, not one template applied across all four.

An industrial rent roll with a single tenant paying $6.50 per square foot on a fifteen-year absolute-net lease looks simple next to a twelve-tenant retail strip, but that simplicity hides its own concentration risk: one tenant's credit decision determines the entire building's income, so the analysis should weigh that tenant's financial statements as heavily as any line item on a multi-tenant roll.

The Rent Roll Checklist Before Identification

A usable rent roll file should answer the same questions a lender's underwriter will ask, before that underwriter asks them, which shortens the loan approval timeline rather than lengthening it.

• Lease expiration schedule sorted by date, not alphabetically by tenant
• Concession value netted out of stated rent for each affected lease
• Trailing twelve-month collections against trailing twelve-month billings
• Security deposit balances reconciled to the ledger
• Any related-party or below-market leases flagged separately
• CAM and expense reimbursement history for commercial tenants

Connecting the Rent Roll to the Exchange Deadline

The rent roll is not a document to file away once the offer is signed; it should stay part of the active exchange record through closing. Rent roll findings should reach the lender, the qualified intermediary, and the investor's tax advisor before the identification notice goes out, not after financing is already underwritten on a stale number. A rent roll that changes materially between the identification date and the closing date should trigger a re-review rather than a silent adjustment at the closing table.

A seller who provides an updated rent roll only days before closing should get the same line-by-line comparison against the original diligence version, since a handful of new leases signed at concessionary terms in the final weeks can quietly reset the income picture the offer was based on.

Common 1031 Exchange Questions

What is the biggest mistake investors make when reading a rent roll for a 1031 replacement?

Treating the headline occupancy percentage as the whole story, without checking lease expiration concentration or the gap between billed and collected rent. Two buildings can show the same occupancy figure and carry very different real income.

How should concessions be handled when comparing rent rolls across candidates?

Concession value should be subtracted from stated rent to produce an effective rent figure, and that effective rent, not the face rent, should be used when comparing candidates against each other or against the income the relinquished property was producing.

Do rent roll requirements differ between multifamily, retail, medical office, and industrial properties?

Yes. Multifamily rolls focus on turnover and monthly terms, retail rolls need CAM and percentage-rent detail, medical office rolls need tenant-improvement amortization schedules, and industrial rolls tend to be triple-net with fewer but larger line items.

How far back should collection history go for a rent roll review?

Trailing twelve months is the standard window, though a longer look-back is useful when a tenant's payment pattern shows a recent change, since a single strong quarter can mask a longer pattern of late or partial payments.

Who uses the rent roll analysis besides the investor?

The lender's underwriter uses it to set debt-service coverage assumptions, the qualified intermediary keeps a copy for the exchange file, and the investor's CPA references it when confirming how the replacement property's income compares to the relinquished asset.

Ready to organize the exchange file?