Leasing and Occupancy Management
The leasing cycle
Leasing converts vacant space into revenue. Understand the sequence: market the unit, qualify the applicant, screen consistently, execute a compliant lease, move the resident in, renew or turn the unit at exit. Occupancy metrics matter: physical occupancy (units occupied) versus economic occupancy (rent collected as a share of rent potential). A property can be physically full and economically weak if concessions or delinquency are high.
Screening and qualification
Apply written, uniformly applied criteria: income ratios (commonly around 3x monthly rent, though policy varies), credit and background review, rental history, and occupancy standards. Consistency is the legal and ethical anchor - the same criteria for every applicant, documented.
Lease terms and renewals
Know the elements of a lease: parties, term, rent, deposits, utilities, rules, maintenance responsibilities, and renewal/termination provisions. Renewal management protects occupancy and reduces turnover cost. Turn cost and vacancy loss are the two expenses that erode leasing gains.
Traps to watch for
- Confusing physical with economic occupancy.
- Applying stricter criteria to one applicant than another - a fair housing exposure.
- Ignoring vacancy loss and concession cost when quoting a "great" lease-up.
- Forgetting that renewal decisions must follow the same non-discriminatory standards as initial applications.
Rule of thumb
Net effective rent = contract rent minus concessions, annualized. Use it to compare deals fairly.
Worked example
A unit rents for $1,500/month with one month free on a 12-month lease. Gross rent is $18,000; the concession is $1,500; net effective rent is $16,500 ÷ 12 = $1,375/month. Compare that figure - not the $1,500 headline - against alternatives.