Why It Matters
You'll see scheduled rent in almost every underwriting model, and the job it does is specific: it gives you the theoretical maximum income the property can produce at today's lease rates. That number then flows into the rest of your pro forma. Subtract vacancy and credit loss and you get effective gross income. Stack operating expenses on top of that and you get NOI. Everything downstream in the income analysis — from break-even point to holding period return — traces back to scheduled rent as its starting assumption. Get that number wrong and every calculation that follows is wrong too.
At a Glance
- What it is: Total rent collectible if 100% occupied at current contract rates, before vacancy or credit loss adjustments
- Also called: Contract Rent, Lease Rent, Stated Rent, Gross Scheduled Rent
- Where it appears: Line one of every pro forma income statement and rental property underwriting model
- Key distinction: This is a theoretical maximum — actual collections will always be lower after vacancy and credit loss
- Relationship to annual rental income: Scheduled rent × 12 months = annual rental income at full occupancy
How It Works
How scheduled rent is calculated. For a single-unit property, scheduled rent is simply the current monthly lease rate. For a multi-unit building, you sum the contract rent for every unit at its current rate — whether a two-bedroom at $1,450/month, a one-bedroom at $1,100/month, and a studio at $875/month sum to $3,425/month in scheduled rent for that three-unit building. If a unit is vacant, you use the current asking or market rate for that unit, not zero — the exercise is to establish what the property would earn at full occupancy. This is why scheduled rent is sometimes called Gross Scheduled Rent (GSR): it is the gross income figure before real-world adjustments touch it.
The role of contract rates vs. market rates. When an existing tenant is locked into a lease below the current market rate, you use their actual contract rate — not what you wish you could charge. This distinction matters for value-add deals. If a 12-unit building has five tenants paying $850/month on below-market leases that expire in six months, the scheduled rent today is lower than the scheduled rent post-lease-renewal. Underwriting that building means modeling two scenarios: current scheduled rent (reflecting in-place leases) and pro forma scheduled rent (reflecting market rents once leases turn). The gap between those two numbers is the value-add opportunity that buyers pay premiums to capture.
From scheduled rent to effective gross income. Scheduled rent is the top of the income waterfall, not the cash you receive. The next step is to subtract vacancy and credit loss — the standard assumption is 5–10% for stabilized multifamily, though actual rates vary by market, property class, and management quality. That adjustment produces effective gross income (EGI). From EGI, subtract operating expenses and you arrive at NOI. This waterfall structure is why annual rental income figures in marketing materials are often based on scheduled rent at full occupancy — they show potential, not probability. Treat them accordingly.
Why it anchors the rent-vs-buy and payback analysis. If you're evaluating whether a rental makes financial sense compared to selling or keeping cash deployed elsewhere — a classic rent-vs-buy framing — scheduled rent sets the gross income ceiling for the rental side of the ledger. Similarly, the payback period for an acquisition depends on how quickly cumulative cash flow and appreciation return your initial investment, and scheduled rent drives the gross income input to that calculation. If you inflate scheduled rent by using optimistic asking rents rather than actual contract rents, you artificially shorten the apparent payback period and make a marginal deal look better than it is.
Real-World Example
Danielle is analyzing a 6-unit apartment building in Cincinnati. Here are the current in-place leases:
Unit 1A (2BR): $1,350/month. Unit 1B (1BR): $1,050/month. Unit 2A (2BR): $1,350/month. Unit 2B (1BR): $1,050/month. Unit 3A (2BR): $1,350/month. Unit 3B (1BR): $1,025/month (legacy tenant, below market by $25).
Scheduled rent: $7,175/month ($86,100/year).
Market rents for comparable units are $1,375 for 2BRs and $1,075 for 1BRs — the building runs $175/month ($2,100/year) below its market-rate potential due to the slightly below-market leases and one legacy 1BR. That gap tells Danielle there's limited value-add upside on the rent side.
From $7,175/month scheduled rent, she applies a 7% vacancy and credit loss assumption: $7,175 × 0.93 = $6,673/month effective gross income. After $2,890/month in operating expenses, her estimated NOI is $3,783/month ($45,396/year). The seller's asking price of $565,000 implies a cap rate of 8.03% — which Danielle checks against local comps before deciding whether the deal meets her holding period return requirements.
Pros & Cons
- Creates a consistent starting point for income projections — every pro forma begins from the same theoretical maximum, making apples-to-apples comparison between properties possible
- Reveals value-add potential clearly — the gap between current scheduled rent and market-rate scheduled rent is a precise measure of how much upside exists in a lease-up or rent-growth strategy
- Forces lease-by-lease documentation — building a scheduled rent figure requires reviewing every in-place lease, which surfaces expired leases, below-market tenants, and upcoming renewal risk early in due diligence
- Enables sensitivity analysis — stress-testing by changing scheduled rent by 5–10% shows how income assumptions affect NOI, break-even point, and returns in each scenario
- Can be misread as actual income — sellers and brokers sometimes present scheduled rent at full occupancy as if it represents stabilized performance, obscuring the real vacancy and credit loss history
- Doesn't reflect lease expiration risk — a building with all leases expiring in 90 days has the same scheduled rent as one with leases spread over three years, even though the risk profiles are entirely different
- Subject to gaming in pro formas — using optimistic asking rents instead of current contract rates inflates scheduled rent and every metric that flows from it, including apparent cap rate, NOI, and payback period
- Ignores non-rent income — parking, laundry, storage, and pet fees don't appear in scheduled rent, so a property with significant ancillary income looks worse on this metric than one relying solely on unit rents
Watch Out
Verify contract rates against actual leases, not the rent roll summary. A rent roll is only as accurate as whoever prepared it. During due diligence, pull the actual executed leases for every unit and confirm the rent stated on the roll matches the signed agreement. Discrepancies — even small ones — indicate either sloppy record-keeping or deliberate manipulation. Either is a red flag.
Distinguish between current and pro forma scheduled rent. A value-add deal will typically be marketed using pro forma scheduled rent at market rates, not the current below-market contract rent. If you model acquisition returns using pro forma numbers but the leases don't turn over for 18 months, you've front-loaded income that won't materialize when you need it to. Budget for the transition period explicitly.
Watch for concessions buried in lease terms. Free rent, discounted first-month rates, and landlord-paid utilities reduce effective income even when the face rent looks strong. A unit at $1,400/month with two months free in a 12-month lease has a net effective rent of $1,167/month — 17% below the stated contract rate. These concessions reduce effective annual rental income even though the scheduled rent figure looks unchanged.
Ask an Investor
The Takeaway
Scheduled rent is the starting assumption, not the result. It tells you what a property could earn at full occupancy under current lease terms — a necessary baseline for every income calculation that follows, from effective gross income to NOI to holding period return. Use it correctly and it anchors a disciplined pro forma. Use it carelessly — accepting pro forma rents instead of contract rents, or skipping lease verification — and it becomes the source of every downstream error in your underwriting. The number looks simple. The discipline is in how you source it.