Loss to lease is the difference between gross market rent (what units would command at current market rates) and gross scheduled rent (in-place rent). Quantifies the rent capture opportunity.
If market rent is $2,500 per unit and in-place rent is $2,100, loss to lease is $400 per unit. On a 20-unit building, that's $96,000 annually of "captured" upside that a buyer could theoretically realize over time (subject to rent control constraints).
For LA multifamily in RSO buildings, loss to lease is often substantial but difficult to capture quickly. Under the July 2026 4% ceiling, closing a 20% loss-to-lease gap takes 5+ years. Buyers discount pro forma rent capture heavily vs. in-place numbers.
From the Sterman LA Multifamily Glossary — defined the way a broker with $1.41 billion across 254 closed transactions actually uses these terms.
Michael Sterman, Senior Managing Director Investments, Marcus & Millichap.
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