I remember the conversation with a Regional Manager for a property management company. We were looking at buying a distressed property. Its occupancy was 71%, and it had 202 units. I asked her how long it would take to lease up the apartment complex. She thought briefly and said we could rent 8-10 units monthly, so 8 months, maybe 10 months. Most people look at leasing historically, add a buffer, and give a projection. I learned that you must do much more work to understand an apartment complex's lease-up process. The next time you face a lease-up challenge, walk through this process.
Starting Occupancy
Where are you starting? If you purchase the property, you must first examine the rent roll and the Bad Debt Summary. Identify pending evictions, pending notices, and employees living on-site who won’t stay with the management change. Ensure all these numbers are totaled up. For example, we initially thought we had 143 occupied units, but after accounting for three pending evictions and two notices moving out before closing, the actual occupancy was 138 units or 68%. It’s also crucial to walk 100% of the units during due diligence to confirm no skips need to be added to your vacant units list.
Turnover
Before focusing on leasing, understand turnover. How many residents left or got evicted in the past year? In our case, it averaged 7 per month, with a turnover rate of 42%. Next, analyze the leasing bell curve. A leasing bell curve involves counting month-to-month (MTM) leases and lease expirations for each month. Some managers mistakenly apply a flat turnover rate without checking lease expirations. For example, a site might have 50% of its leases expiring in December, which would be a huge red flag. Turnover is applied to lease expirations, factoring in skips and evictions.
Leasing Bell Curve Example:
Leads and Closing Ratio
Next, analyze the site’s historical lead volume. The leasing equation is:
Number of Leads × Closing Ratio = Number of Leases.
If a site historically generates 75-100 leads per month and closes 8-10 leases, that’s a 10% closing ratio. A well-performing site should aim for 20-25%. However, some sites have flawed data because leasing teams don’t always track leads properly. The data is misleading if a site reports a 35% closing ratio but artificially reduces the number of recorded leads.
Always verify the numbers, analyze lead sources, and focus on increasing qualified leads through Google Ads, additional online ads, SEO, and outreach marketing. However, improving the closing ratio shouldn’t come from manipulating lead numbers but from better leasing skills.
To boost closing ratio performance, review your leasing sales script, listen to phone calls, shadow leasing agents, conduct mock leasing tours and calls, and use secret shoppers to identify areas for improvement. You’d be surprised how few property owners or executives actually listen to resident phone calls—yet they are one of the most critical tools for understanding and improving the leasing process at any site.
Leasing Projections
Now that we have the data, we can calculate the time to lease up the property.
Formula: Projected Leases = (# of Leads × Closing Ratio) - (Move-Outs + Skips/Evictions)
Consider seasonality. December is typically a slow leasing month, so projections should reflect this.
Analyzing real numbers prevents blind guessing. As an owner or regional manager, focus on increasing leads and improving your team’s closing ratio. Track progress regularly to see if you are ahead or behind schedule.
Watch for large lease expirations—this often happens due to prior specials or a sudden influx of new units. A site might seem on track until realizing that 40 lease expirations in the last quarter need to be offset. Work on renewals early to stay ahead.
Ensure your teams understand key numbers and don’t game the system. What gets rewarded gets done—if you focus on closing ratios, they will improve, but make sure it’s due to better skills rather than reduced lead volume.
Returning to the Regional Manager’s estimate of 8 months: maybe she could do it, but now we know the numbers she needs to hit to achieve that goal. Stop guessing and start doing the math.