vacancy vs. loss to lease - Posted by Ben (FL)

Posted by ray@lcorn on September 04, 2003 at 08:21:57:


Likely it is an issue of semantics.

If you’re looking at actual operating numbers prepared on the cash basis of accounting, there is no allowance for vacancy. Since the income reflects only the actual cash received, then there is no need to provide a deduction to income for delinquent rent. There may be a line item for collection expense where costs of collection are recorded. The expense item can be titled with a variety of descriptions, and “loss to lease” may be one of them.

However, if the statements are prepared on the accrual basis of accounting, then the income is booked as to the total rent due under the leases and an entry must be made to reflect any rents not actually collected. The “loss to lease” could be such an entry.

I believe the IRS actually requires most owners to use the cash basis of accounting for real estate projects, but I may be wrong on that.

I would suggest that you ask whomever supplied the statement exactly what is in the line item.


vacancy vs. loss to lease - Posted by Ben (FL)

Posted by Ben (FL) on September 03, 2003 at 22:17:30:

I’ve been looking at some P&L statements. I thought I knew what vacancy rates were, but then I saw “loss to lease”. What’s the difference?