Unit Mix in Financial Modeling

What is Unit Mix?

Unit mix is defined as a mix of different number of bedroom apartments in a development or apartment complex. Normally, the number of bedrooms ranges from one to five, and any given apartment complex will have a mix of bedroom options and different floor plans for each type. Every development is trying to achieve the perfect “mix” of each type of apartment for their property, to maximize profit and keep the property occupied year round. 

Many factors are used to decide unit mix including location, architectural design, development size, demographics, and the current dynamics of the market. 

This Excel table shows the differing unit mix in a Condo project as well as the number of units, square feet, and price per square foot. This is how developers would analyze the pros and cons of different unit mixes. 

Unit Mix in Real Estate

Depending on the demand of the market and the location, developers will create mixes that will best suit the demand. For example, if there is a predominance of families, there will be more 2+ bedroom apartments. However, if there are more young professionals who want lofts or single bedrooms, then those will be put in the “mix.” Some multifamily projects have an affordable rent component that would also be outlined on the Unit Mix at a lower rental rate. 

The latter is very common in urban areas such as New York City, where the former is more likely to be found in places like the suburbs of major cities where families are more likely to reside. Understanding the rental market is key to understanding which is more likely to be present in your calculations. 

Conclusion

The proper unit mix is key to having a successful development or apartment complex. If all types of units in the mix are occupied then the development will be bringing in more rent, therefore understanding the demand of unit mix is needed to be successful in the industry.    

---

About the Author

Eric Bergin is the founder of TSM. He realized that there was a need for real estate financial models that were more than just generic templates. He wanted to create a personalized product for his customers that would ensure success for them and their company. Please reach out to him if you have any questions about unit mix or if he can help you with your modeling needs.