On Commercial Real Estate Investments here is how we calculate Rent Per Unit & Per Square Feet of Improvements
100 Apartment Units, 750 Sq.Ft. Unit with Rent of $800 per Unit per Month
100 Units X 750 Sq.Ft. = 75,000 Sq.Ft.
$800 Rent X 100 Units = $80,000 X 12 Months = $960,000
When analyzing Real Estate we always use Annual Numbers except for Apartments where we use:
Rent Per Unit
Rent Per Square Foot Per Month ( $800 Rent ÷ 750 Sq.Ft. = $1.07 per Sq.Ft. per month)
**By using the rent per Sq.Ft. per month we can more accurately compare various apartments.
Office, Retail, and Industrial Properties:
Use Square Feet as the Unit of Measurement.
We also quote an annual rate when giving the rental rate.
Warehouse: $20,000 Sq.Ft.
Rental Rate: $5.00 per Sq.Ft.
Annual Rent: $100,000 per year ÷ 12 Months = $8,333.33 per month
When analyzing a commercial property the Gross Potential Rent would be $100,000 and the Rental Rate is $5.00.