What is the difference between loss to loss, vacancy loss, and economic loss?
I *think* physical vacancy rate is actually how much is empty. So 5% physical vacancy for 100 unit building is 5 units vacant. But say also rent for those units is $100 each. 

What is the loss to loss, vacancy loss, and economic loss?

What is the difference between loss to loss, vacancy loss, and economic loss?
[{"id": "edsxe1p", "text": "Physical vacancy loss is as you state, actual vacant units at the property (eg five empty units out of 100 = 5%)\n\nEconomic loss is the percentage of actual rental revenue vs what you should be receiving. The delta between physical and economic is usually attributed to an in-place tenants failure to pay but could have other variables such as concessions depending on your accounting. \n\nLoss to loss (which I\u2019m assuming to mean the more commonly used loss to lease) is the lost revenue from actual in-place leases vs what the owner could be achieving if all the leases expired and were resigned at \u201cmarket rate\u201d. This is seen more for proforma purposes. Example: Duplex has two leases with a few months remaining at $800/mo each. Market rents have increased to $1,000/mo per unit since signing. Your implied loss to lease would be $400/mo ($200/unit) or $4,800/yr due to the lost revenue from not getting full market rent. It would imply to someone valuing your property what the revenue potential could be in the near future.  ", "replies": [{"id": "edtpy8w", "text": "Thank you for the answer! I liked the way you explained loss to loss; was a bit more straight forward. ", "replies": [], "depth": 2}], "depth": 1}, {"id": "edsz0f4", "text": "Imagine an apartment building with 100 units. Your property manager does her research, and announces to her staff and bosses that these units should lease at $3,000 per month. This is your market rent. Market rent is an attainable pie in the sky for property managers and leasing agents. For one year, your total market rent would be $3,600,000.\n\nLet\u2019s say that each of those units, despite the property manager\u2019s decree, are currently leased at an average $2,800 per month. This is your gross rent. Thus, gross rent for the year would be $3,360,000.\n\nLoss-to-lease represents the gap between what your leases actually say ($2,800) and what you want your leases to say ($3,000). In this instance, loss-to-lease is $200 per unit per month or $240,000 per year.\n\nImagine one of those potential $2,800 units is still vacant in December. It\u2019s hard to lease in December, and your property manager is desperate. A tenant walks in and offers to rent at $2,700. Your property manager agrees and offers a $100 recurring monthly concession. This $100 is your loss to concession. If 10 of the units have this concession, tour total loss to concession is $12,000 per year.\n\nNow further imagine that 5% of your units are vacant. At $2,800 per unit, 5 units would represent $168,000 of lost GPR per year. This is your vacancy loss.\n\nYour economic loss is your vacancy + concession, or $180,000 per year.\n\nAn income statement would show\n\nMarket rent: $3,360,000\nLoss to lease: (240,000)\nGPR: $3,360,000\nVacancy: (168,000)\nEffective Rent: $3,192,000\nConcessions: (12,000)\nNet Effective Rent: $3,180,000\n\nIf you\u2019re looking to brush up on this sort of knowledge and expand your CRE financial modeling skills, I highly recommend [Breaking into REPE](https://www.leveragedbreakdowns.com/course/).", "replies": [{"id": "edt5jjj", "text": "Have you completed this course you linked to?  Have any thoughts you could provide on it?", "replies": [{"id": "edtpnv8", "text": "HugeAxeman,\n\nI developed [Breaking down REPE](https://www.leveragedbreakdowns.com) to help outsiders break into CRE by clearly explaining concepts much in the same way I do on reddit, but through a structured curriculum. The course kicks off with an extremely simple 60-minute LBO case study example. This first module makes sure you understand the basics of cash in, cash out, the time value of money, capital structure, and leverage. The second module dives headfirst into the nitty gritty details of a multifamily acquisition model. We build the model together, from scratch.\n\nWhat separates Breaking down REPE is our emphasis on empowering the student to build their own models from scratch. We don\u2019t want you to memorize our pre-set templates. Instead, we highlight the process behind each modeling decision so you can go off to build your own templates that suit your specific needs.", "replies": [], "depth": 3}], "depth": 2}, {"id": "edtntfz", "text": "Thank you! Awesome answer! Will look into the course you suggested!", "replies": [{"id": "edtpqmt", "text": "Awesome, thank you! Happy to answer any questions you have. The course has a refund policy within the first month if you don\u2019t like it. However, each student I\u2019ve had has walked away having learned more than they initially expected.", "replies": [], "depth": 3}], "depth": 2}, {"id": "edtp48y", "text": "Thank you! Awesome Answer!\n\nDefinitely will look into the course you recommended. I just have sooo much to learn. ", "replies": [], "depth": 2}], "depth": 1}]