Joe DownsCEO & Co-Founder, Belrose Storage Group. Founder, Storage Moguls.

Simple Pro Forma Payback Period on New Units

20 Mar 2026 · 1 min

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A landlord walks through the math on expanding a rental portfolio by 100 units at $100 per month each. Construction costs $500,000, annual revenue is $120,000, so the payback period is 4.2 years. After that, it's pure profit.

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All right. Now let's put it all together with a pro forma that justifies expansion, because this is where we see the financial viability of our investment. So imagine 100 of those 100 new units, each renting for $100 a month. In this example, we're 100% occupied. Makes the math easier. That's a— that's $10,000 in monthly revenue annually. And that translates to $120,000 in revenue. If the build cost for these 100 units is, let's say, $500 grand, We can calculate a payback period. So dividing $500,000 by the cost of $120,000 annual revenue gives us a payback period of 4.2 years. And after that, then we're just looking at pure profit.