What is a lease trade out report?

What is a lease trade out report in multifamily?

A Lease Trade-Out Report is an analysis used in real estate to evaluate the benefits and drawbacks of replacing a current tenant with a new one before the end of the existing lease. This report includes a financial comparison of remaining rent versus potential income from a new lease, assessment of market conditions, and costs associated with tenant turnover. It helps property owners and managers decide if allowing an early lease termination is financially advantageous by weighing the risks and opportunities involved.

Lease tradeout reports typically include:

  1. Current Lease Terms: Details of the existing leases, including rental rates, lease duration, and any concessions given.
  2. Market Rental Rates: Comparison of current lease rates with prevailing market rates for similar properties.
  3. Cost of Turnover: Estimated expenses associated with tenant turnover, such as marketing, refurbishment, and vacancy losses.
  4. Renewal vs. New Lease Analysis: Financial comparison of renewing existing leases (possibly at adjusted rates) versus the potential income from new leases at market rates.

Lease tradeoue reports helps property managers and real estate investors make informed decisions about lease renewals, rent adjustments, and investment in tenant retention, aiming to optimize revenue and minimize turnover costs.

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