How to Read a Rent Roll Before You Buy
A rent roll is the shortest honest summary of a building. Most of the risk in a commercial purchase is visible in it, if you know what to look at.
A rent roll lists every unit, who occupies it, what they pay and when their lease ends. It takes two minutes to skim and a morning to properly interrogate. Do the morning.
Look at expiry dates first
If a large share of leases expire in the same twelve months, you are buying concentrated renewal risk. Staggered expiries are worth paying for. Clustered expiries should be priced.
Compare contract rent to market rent
Below-market rents are opportunity, but only if the leases roll soon enough for you to capture it. A tenant twelve years into a fifteen-year lease at half market rent is a problem you inherit, not an upside you unlock.
Check who is actually paying
- Arrears by tenant, not just a total
- Concessions, free-rent periods and unusual step-ups
- Related-party tenancies that may not survive the sale
Reconcile it against the bank statements
A rent roll is a claim. Deposits into the operating account are evidence. Ask for both and reconcile them for at least six months — differences are where the story is.
Read the actual leases
The rent roll summarises; the lease governs. Renewal options, rights of first refusal, exclusivity clauses and who pays for the roof are all in the document and none of them are in the summary.
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General information for the Carolinas market, not legal, tax or investment advice. Rules differ by state and by situation — take professional advice before acting.