Determine the optimal rent to charge based on property value, expenses, and yield targets.
Enter 0 if property is fully owned.
Tax, Insurance, HOA, Maintenance, Management.
Typical range: 5% – 10%
Standard safety margin for unoccupied months.
Recommended Monthly Rent (Based on Yield):$0.00
Break-Even Rent (Costs Only):$0.00
The "1% Rule" Benchmark:$0.00
Estimated Monthly Cash Flow:$0.00
How to Calculate Monthly Rental Rates
Setting the correct monthly rental rate is the most critical decision a landlord makes. Set the rent too high, and you face extended vacancy periods that kill your annual returns. Set it too low, and you leave money on the table while potentially attracting less qualified tenants. This Monthly Rental Rate Calculator helps investors find the sweet spot between profitability and market competitiveness.
Key Factors in Determining Rent
While looking at comparable properties ("comps") on Zillow or Craigslist is a good starting point, a mathematical approach ensures your investment is financially sound. This calculator uses three primary methods:
Gross Yield Target: Many investors aim for a specific annual return on the property's value (typically 6-10%). This method calculates rent by taking the property value, multiplying by the target percentage, and dividing by 12 months.
Cost-Plus (Break-Even): This establishes the absolute floor for your rent price. It sums up your mortgage, taxes, insurance, HOA fees, and maintenance reserves. You must charge at least this amount to avoid losing money every month.
The 1% Rule: A quick industry rule of thumb stating that the monthly rent should be approximately 1% of the property's purchase price. While harder to achieve in expensive markets, it remains a standard benchmark for cash-flow positive properties.
Understanding Expenses and Vacancy
Novice landlords often forget to account for vacancy rates. Even in hot markets, turnover takes time. A standard 5% vacancy allowance implies the property will be empty for about 18 days per year. If your rental rate calculation doesn't account for this, your actual annual income will fall short of projections.
Interpreting the Results
Recommended Rent (Yield Based): This is your target. If the local market supports this price, your investment meets your financial goals.
Cash Flow: This is the net profit in your pocket every month after the mortgage and operating expenses are paid. A positive cash flow is essential for long-term sustainability and building a reserve fund for major repairs like roof replacement or HVAC issues.
function calculateRentalRate() {
// 1. Get Input Values
var propValue = parseFloat(document.getElementById('propValue').value);
var monthlyMortgage = parseFloat(document.getElementById('monthlyMortgage').value);
var monthlyExpenses = parseFloat(document.getElementById('monthlyExpenses').value);
var targetYield = parseFloat(document.getElementById('targetYield').value);
var vacancyRate = parseFloat(document.getElementById('vacancyAllowance').value);
// 2. Validate Inputs
if (isNaN(propValue) || propValue 0) {
breakEvenRent = totalMonthlyCosts / occupancyFactor;
} else {
breakEvenRent = totalMonthlyCosts; // Fallback
}
// D. Calculate Estimated Cash Flow based on the Yield Rent
// Cash Flow = (Yield Rent * Occupancy Factor) – Total Monthly Costs
var estimatedEffectiveIncome = yieldBasedRent * occupancyFactor;
var monthlyCashFlow = estimatedEffectiveIncome – totalMonthlyCosts;
// 4. Update DOM Elements
document.getElementById('yieldRentResult').innerText = formatCurrency(yieldBasedRent);
document.getElementById('breakEvenResult').innerText = formatCurrency(breakEvenRent);
document.getElementById('onePercentResult').innerText = formatCurrency(onePercentRuleRent);
var cashFlowEl = document.getElementById('cashFlowResult');
cashFlowEl.innerText = formatCurrency(monthlyCashFlow);
// Color coding for cash flow
if (monthlyCashFlow >= 0) {
cashFlowEl.style.color = "#27ae60"; // Green
} else {
cashFlowEl.style.color = "#c0392b"; // Red
}
// Show warning if Yield Rent is below Break Even
var alertBox = document.getElementById('cashFlowAlert');
if (yieldBasedRent < breakEvenRent) {
alertBox.style.display = 'block';
alertBox.innerText = "Warning: Your desired yield results in a rent lower than your break-even cost. You will have negative cash flow.";
} else {
alertBox.style.display = 'none';
}
// Show results section
document.getElementById('resultsSection').style.display = 'block';
}
function formatCurrency(num) {
return '$' + num.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
}