How to Determine the Rental Cost of a Property

Step-by-Step Guide

1. 1

   Step 1: Calculate 1.1 percent of the value of your property.

   This will result in the monthly amount you should charge renters.
   
   Professional investors use this percentage as a rule of thumb for determining the rental price of a unit.
   
   For example, if you are renting out an apartment in your home and your home is worth $90,000, use the equation $90,000 x .011 = $990.
   
   This would be the monthly amount you could charge renters for the unit.
2. 2

   Step 2: Understand the limitations of using this calculation.

   While it might be a good place to start, this flat calculation fails to take into account other factors that add to or detract from the rental value of a property.
   
   Also, if the home is in a high-income neighborhood, the percentage calculation might result in a rental price that is too high.
   
   Other considerations, such as location, nearby amenities, design features and layout, also affect how much rent you can charge.
   
   Try the same calculation using a range between
   1.0% to
   1.3%, based upon rent rates and availability of similar rental properties in the area. , If the property is located in a hot market with fierce competition from other rental properties, this formula may make the rent too high to compete with other properties.
   
   In this case, you should survey the current market by comparing your unit to other comparable rental properties to find the ideal cost.
3. 3

   Step 3: Consider the market.

Detailed Guide

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