Setting the right rental price is crucial for maximizing your return on investment as a property owner while remaining competitive in the market. This calculator helps you determine a recommended monthly rent based on your property's expenses, your desired profit, and accounting for potential vacancies.
The Calculation Explained
The recommended rent is calculated using the following logic:
Calculate Gross Operating Income (GOI): This is the total income you expect to receive from the property over a year if it were fully occupied.
Factor in Vacancy: We subtract an estimated amount for periods when the property might be vacant.
Determine Net Operating Income (NOI): This is the income after accounting for vacancy.
Add Desired Profit: Your desired profit is added to the NOI to arrive at the target gross annual income.
Calculate Monthly Rent: Finally, this target gross annual income is divided by 12 to get the recommended monthly rent.
In this scenario, the recommended monthly rent to charge is approximately $1,512.
Important Considerations:
Market Research: Always research comparable rental properties in your area. Your calculated rent should be competitive.
Property Condition and Amenities: Higher rents can be justified for well-maintained properties with desirable features and amenities.
Location: Prime locations often command higher rents, regardless of expenses.
Economic Conditions: Local job markets and overall economic health can influence rental demand and pricing.
Property Taxes and Insurance: Ensure these are accurately reflected in your monthly expenses.
Maintenance and Repairs: Budget for ongoing maintenance.
This calculator provides a data-driven starting point for your rental pricing strategy. Adjust based on market realities and your specific property's unique selling points.
function calculateRent() {
var monthlyExpenses = parseFloat(document.getElementById("monthlyExpenses").value);
var desiredProfitMargin = parseFloat(document.getElementById("desiredProfitMargin").value);
var vacancyRate = parseFloat(document.getElementById("vacancyRate").value);
var resultDiv = document.getElementById("result");
resultDiv.innerHTML = "; // Clear previous result
if (isNaN(monthlyExpenses) || isNaN(desiredProfitMargin) || isNaN(vacancyRate) ||
monthlyExpenses < 0 || desiredProfitMargin < 0 || vacancyRate 100) {
resultDiv.innerHTML = 'Please enter valid positive numbers for all fields. Vacancy rate must be between 0 and 100.';
resultDiv.style.backgroundColor = '#ffc107'; // Warning color
resultDiv.style.color = '#333';
return;
}
var totalAnnualExpenses = monthlyExpenses * 12;
var annualVacancyLoss = totalAnnualExpenses * (vacancyRate / 100);
var totalExpensesIncludingVacancy = totalAnnualExpenses + annualVacancyLoss;
var desiredAnnualProfit = totalExpensesIncludingVacancy * (desiredProfitMargin / 100);
var targetGrossAnnualIncome = totalExpensesIncludingVacancy + desiredAnnualProfit;
var recommendedMonthlyRent = targetGrossAnnualIncome / 12;
// Round to two decimal places for currency
recommendedMonthlyRent = Math.round(recommendedMonthlyRent * 100) / 100;
resultDiv.innerHTML = 'Recommended Monthly Rent: $' + recommendedMonthlyRent.toLocaleString() + '';
resultDiv.style.backgroundColor = 'var(–success-green)';
resultDiv.style.color = 'white';
}