The theoretical maximum rent if every unit was leased at market all year.
Gross Potential Rent (GPR) is the total rental income a property would generate if every unit was leased at market rate for all 12 months of the year. GPR is the theoretical maximum — the starting point for income calculation, before deducting vacancy, credit loss, and concessions to arrive at Effective Gross Income (EGI).
GPR is the income calculation's starting point. Below GPR sits a chain of deductions that produce more realistic income measures: GPR – Vacancy = Scheduled Gross Rent. SGR – Credit Loss = Effective Gross Income (with other income added). EGI – Operating Expenses = NOI. NOI – Debt Service = Cash Flow. Each step subtracts something from the theoretical maximum.
GPR matters because vacancy and concession assumptions are typically expressed as percentages of GPR. A 6% vacancy assumption on GPR of $500k = $30k vacancy. A 2% concession allowance on the same GPR = $10k of concessions. The accuracy of GPR drives the accuracy of every downstream calculation.
There are two flavors. GPR at current in-place rents uses the rent roll's contracted rents. GPR at market rents uses comparable submarket rents (often higher than in-place on value-add deals). The difference between the two is loss to lease — the rent upside available as leases roll to market.
For investors, separating GPR analysis from below-the-line deductions reveals the property's pure revenue potential. Many pro forma stretches start with stretched GPR (above-market rent assumptions). Sanity-check market rent assumptions against comps before believing the resulting NOI projections — GPR errors compound through everything downstream.
| Property: 30-unit apartment, mix of unit types | |
| Gross Potential Rent (at market rents) | $540,000 |
| – Loss to lease (in-place vs market gap) | ($26,000) |
| Scheduled Gross Rent (at in-place) | $514,000 |
| – Vacancy (6% of GPR) | ($32,400) |
| – Concessions (1% of GPR) | ($5,400) |
| – Credit loss (1%) | ($5,400) |
| + Other income | $22,000 |
| Effective Gross Income | $492,800 |
Total rental income a property would generate if every unit was leased at market rate for all 12 months. The theoretical maximum income — the starting point before any deductions.
GPR uses market rents (what units could rent for); rent roll uses contracted in-place rents (what units are actually paying). The difference is loss to lease.
Yes — concessions (free rent, move-in specials) are typically deducted from GPR to arrive at effective income. Treating concessions as zero-cost overstates the property's realistic income.
GPR is the starting point; EGI is what's left after vacancy, credit loss, and concessions are deducted. EGI is typically 85–95% of GPR depending on property class and condition.
For pro forma analysis, market rents typically used (with loss-to-lease showing the realization gap). For trailing analysis, in-place rents are used (matching the rent roll). Be explicit about which you're using.
Matrix underwrites loans on realistic GPR assumptions supported by market comps. No stretched income, no surprise sizing changes at funding.
