What is GPR in Commercial Real Estate?
GPR, or gross potential rent, is the maximum amount of rent money an owner or investor can expect to make from a property during a specific time period. Unlike a rent roll, which compiles all current rents from a property, gross potential rent assumes 100% occupancy. It is calculated by adding together the market rent of every unit in a project.
For example, a property with 15 units, each with a market rent of $4,000 a month, has a monthly GPR of $60,000. In order to determine market rent, an investor should look at similar properties in the same area for an accurate estimate. By doing this, the investor gets a good idea of a property’s profitability before they decide to purchase it.
Gross Potential Rent vs. Gross Potential Income
Gross potential rent is often equated with gross potential income (GPI), which, in practice, is often the same, but sometimes incorporates potential income from parking spaces, vending machines, and other ancillary income sources. Another related term, effective gross income (EGI), is calculated by taking a property’s gross potential income, and subtracting all physical and economic vacancies.