Understanding the Lease-Up Period in Apartment Investing
A lease-up period can make or break your investment period. Find out what's involved.
Get Quotes ← Apply for a loan in minutes and get multiple quotes today
What Is a Lease-Up Period?
In apartment property investing, you may hear a lot about a property’s lease-up period. This is especially true when discussing new developments. The lease-up refers to the period between pre-leasing and stabilization. Stabilization is the point when an asset reaches the breakeven occupancy rate, generally 95%.
The lease-up period is a critical time for a project. The landlord most focus on signing as many leases as quickly as possible. A multifamily owner must have a clear lease-up strategy to ensure the development is financially sound.
For a construction project, the typical lease-up timeline can range anywhere from six to 18 months, depending on the project size. During this period, the team working with the development must handle many things. These tasks involve establishing the community within the highly competitive multifamily environment. They can include varied tasks such as:
- Selecting a property management company
- Overseeing staffing
- Implementing software and systems
- Creating a property website
It isn't an exaggeration to say that the lease-up period can spell out the success or failure of a project. A successful lease-up period frees up cash flow in the crucial early stages of a project. Financing a new build can be challenging. But, understanding your property's income — and occupancy — is crucial before the building is complete.