Quick Answer: Gross rent (also called face rent or headline rent) is the stated monthly rent on a lease before any concessions. Net effective rent is the actual rent collected after concessions are spread across the lease term. If you offer one month free on a 12-month lease at $1,800/month, gross rent is $1,800 but net effective rent is $1,650.
For a deep dive into net effective rent (including the formula, concession examples, and comp analysis methodology), see our full NER guide.
What Is Gross Rent?
Gross rent is the face value of a lease — the monthly amount stated in the lease agreement before any concessions, discounts, or free rent periods are factored in. It is the headline number a prospect sees on a listing or a leasing agent quotes during a tour.
Also called: face rent, headline rent, asking rent
Example: A lease agreement states $1,800 per month for 12 months. The gross rent is $1,800/month regardless of any move-in specials offered.
What Is Net Effective Rent?
Net effective rent is the average monthly rent actually collected over the full lease term after all concessions are amortized. It reflects the true economic value of the lease to the property.
Example: ($1,800 × 12 − $1,800) ÷ 12 = $1,650/month net effective
Key Differences: Gross Rent vs Net Effective Rent
| Factor | Gross Rent | Net Effective Rent |
|---|---|---|
| Concessions | Not reflected | Fully amortized |
| Revenue accuracy | Overstates actual income | True economic rent |
| Best for | Marketing, listing prices | Financial analysis, budgeting |
| Comparability | Misleading across properties | Apples-to-apples comparison |
| Renewal baseline | Used for renewal offers | True cost basis for retention |
| Investor reporting | Supplementary | Preferred metric |
When to Use Each Metric
Use gross rent when: Setting listing prices, marketing units, or quoting rates to prospects. Gross rent is the external-facing number and is useful for comp analysis when concessions are tracked separately.
Use net effective rent when: Calculating actual revenue, underwriting acquisitions, comparing properties with different concession strategies, budgeting, and reporting to investors. Net effective rent tells you what you are actually collecting.
How They Relate in Practice
The spread between gross rent and net effective rent reveals your concession exposure. A property advertising $2,000/month gross rent with 6 weeks free has a net effective of $1,769 — an 11.5% discount. If a competitor advertises $1,900/month with no concessions, they are actually collecting $131 more per month despite the lower headline number.
Sophisticated operators monitor the gross-to-net spread across their portfolio. When the spread widens, it signals that properties are relying on concessions to fill units — a leading indicator of market softness. When the spread narrows, demand is strong enough to lease at face value. Use our net effective rent calculator to quantify how concessions impact your true rent, and explore BubbleGum BI's market intelligence tools to monitor the gross-to-net spread across every property.
See Gross vs Net Effective Rent Across Every Unit
BubbleGum BI calculates net effective rent at the unit level and tracks your concession exposure across the portfolio in real time.
Book a Demo