How Can an Apartment Occupancy Calculator Save You Time and Money?

Apartment Occupancy Calculator

The apartment occupancy rate is the ratio of rented units or gross income as compared to the maximum potential. It can be calculated as physical occupancy or economic occupancy. It can be calculated at one point in time and can also be examined over time to detect trends. Knowing the occupancy rate is important for an apartment building investor for several reasons. The first is that it helps identify anticipated cash flow. It also can help you gauge how well the apartments are being managed. If the building you have invested in or anticipate investing in has a low occupancy rate relative to others around it, this may indicate that the building is in need of sprucing up, new marketing materials or better management. If the occupancy rate is higher than comparable apartment buildings nearby, this may indicate a well-managed and well-maintained property.

How Can an Apartment Occupancy Calculator Help Save You Time and Money?

Calculate Occupancy Rate

Three types of occupancy rates are important: physical, economic and room occupancy. All can be calculated either by using spreadsheet software, such as excel, or by using a calculator either online or on your phone.

Physical

Physical occupancy rate is the percentage of available rental space that is occupied with paying tenants. The occupancy rate formula for a particular month is number of units rented/ number available to be rented* 100. For example, you may have 50 units available for renting and 45 of them have paying tenants. To calculate physical occupancy rate, divide 45 by 50 for a total of .90. To express as a percentage multiply .90 by 100. The physical occupancy rate is 90 percent.

Some people confuse physical occupancy and leased occupancy. Here’s how to calculate the leased percentage: current number of units occupied + (number of units with signed leases yet to move in) / total number of units * 100%. This measurement can be misleading. For example, you may have units occupied with people moving out next month but also signed leases for people moving in next month. This would result is you showing an occupancy of more than 100 percent.

Economic

An economic occupancy rate is the proportion of the gross potential rent that is collected—the money that is actually paid to your business. The gross potential rent (GPR) is the amount of rent that would be collected if you rented out all the apartments at the amount of rent shown in the rental contract. The economic occupancy rate formula is (GPR minus deductions)/GPR * 100. To calculate the economic occupancy apartment building owners first calculate the GPR by multiplying the number of apartments by the amount of rent that you could charge for each; for example, 70 apartments at $200 each would yield a GPR of $14,000. Then deduct out the rent not received because units are vacant or occupied by someone who receives rent for free, such as the building supervisor, and the amount of discounts given. Let’s say that one apartment is vacant and one is occupied by a supervisor. Another apartment is discounted $100. That means you would deduct $500 from the $14,000 to get a total of $13,500. Divide $13,500 by $14,000 and multiply that by 100. Your economic occupancy rate is 96.4 percent.

Room

A room occupancy calculator is important to ensure that you comply with state laws regarding how many people can live in an apartment unit. The room occupancy formula is total square feet / number of tenants occupying the apartment. For example, New York law says that you must have at least 80 square feet per person. Suppose you have three people living in a two-room apartment. One room is 8×10 (80 square feet) and the other room is 12×14 (168 square feet). The total square footage is 248 (80 plus 168) Divide 248 by the number of tenants (3) to get 82.6. From this you determine that you have 82.6 square feet per person and are in compliance with the law.