In one sentence
The difference between a unit's market rent and its actual in-place rent, reflecting below-market leases.
The longer version
Loss to lease measures how far in-place rents sit below current market rents, a gap value-add investors aim to close as leases roll. It is a component of economic vacancy and a signal of upside or risk.
A large loss to lease can be an opportunity, if rents can be raised, or a warning, if the market rents assumed are aggressive. Lenders test which.
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