How Much Should You Charge on a Residential Rental Property?

Owning a rental property can be an effective way to secure your financial future. However, as a landlord, you’ll want to find a balance between charging what the market will bear and realizing what you need to make a profit. How can you find such a balance? Here are a few suggestions.

Consider Your Regular Expenses

The first step in determining your desired rental rate is to calculate the costs related to owning the property. If you’re paying a mortgage on the property that you intend to rent out, then you’ll need to factor your mortgage payment into the rent charge.

It will also be necessary to include the interest and other fees paid on the mortgage as well as property taxes and insurance paid on the house. Generally speaking, the tenant will be responsible for utilities such as the cable or electric bills. In many leases, the tenant is also responsible for trash removal, snow removal and basic landscaping costs.

Make Room for a Rainy Day

Ideally, the rent that you charge will be more than the cost of owning and maintaining the property. This will allow you to both make a profit and have some money left over to cover any unexpected expenses that may arise. For instance, the toilet could explode in the middle of the night, or a tree could crash through the roof. Those are problems that need to be taken care of right away, and having an emergency fund makes it easier to do so. From a financial perspective, building in an additional charge for upkeep only makes sense.

Consider the Market

As a rule of thumb, you can charge per month roughly 1 percent of a home’s value. Therefore, if your home is worth $100,000, plan on getting about $1,000 a month from a tenant. Of course, if your home is in a desirable area, it may be possible to charge more than that and attract interest from renters. If the home is in a less desirable area, it may be necessary to charge less than average to make the property attractive on the open market.

Owning a rental property is similar in many ways to running a business. You need to know your numbers and base your rental rate on what the market is willing to pay. There are many resources you can use to determine how much to charge or find tips as to how you can attract tenants to your property.

Posted in

Common Health Issues That Affect Middle-Aged Men

By Andrea Kay | January 27, 2023

As you age, your body often declines in health. Because your body is not in its prime and your organs have been working longer,…

How to Measure Product Success in Your Business

By Andrea Kay | January 26, 2023

As a business owner, it is paramount to measure the success of your products in order to expand and reap profits. By surveying which…

What to Do Before You and Your Partner Decide to Have a Baby

By Andrea Kay | December 27, 2022

Having a baby is a big step to take with your partner. You’re bringing a new life into the world and you’re permanently changing…

What to Do Before Buying a Business

By Andrea Kay | December 27, 2022

If you want to build wealth, owning a business can be a great way to do that. Some people make that happen by building…

Why Old Software is Hurting Your Business

By Andrea Kay | December 27, 2022

Software is essential for just about every conceivable business. No matter your industry, no matter your market, you need to be taking advantage of…

Crucial Business Functions That Require Greater Investment

By Andrea Kay | December 27, 2022

There are a lot of elements that go into running a business. However, some of them deserve special attention. When you shift your focus…

What You Need to Know About Smart Credit Card Use

By Andrea Kay | December 9, 2022

Are you applying for a credit card for the first time? Having a credit card will open many doors for you, especially if you’re…

How to Improve Cybersecurity at Your Business

By Andrea Kay | December 9, 2022

Every business in the modern world is going to incorporate a substantial amount of technology. This will also be true for your business, no…

Health Risks That Increase as You Get Older

By Andrea Kay | December 7, 2022

There are plenty of things to look forward to as you age. Retirement tends to be one of the more commonly discussed and planned-for…