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Determine Rent Price Factors for Multi-Family Apartment Profitability

Capital OneData Scientist · Technical Screen
MediumData ScientistTechnical ScreenAnalytics & Experimentation

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This interview question evaluates metric design, causal reasoning, experiment setup, diagnostics, SQL/statistical checks, and recommendations in a realistic interview setting. A strong answer for Determine Rent Price Factors for Multi-Family Apartment Profitability states assumptions, handles edge cases, explains trade-offs, and shows how to validate the result clearly.

Scenario

Evaluating profitability for a $10 M multi-family apartment project (100 units, 20 % vacancy, 4.6 % mortgage, $600 k annual interest, $400 k fixed costs, variable cost = 10 % of rent, equipment ROI 10 %).

Question

Which financial and operational factors must be considered when setting rent price for this property? What is the minimum monthly rent per unit that achieves break-even (or target profit) under current 80 % occupancy? If the unit rent is lowered to $1 200, what percentage of units must be rented to maintain the same annual profit?

Hints

Think mortgage payments, fixed vs. variable costs, vacancy, required ROI, and sensitivity analysis for rent vs. occupancy.