How Do You Determine Rent Amount?
Hello ePartners,
My questions are .. is there a formula to use to figure out the rent amount on a house... say I want to rent out a house and the house's price is $420K .. I know I can always call management properties and ask but I am wondering if there is such formula on figuring the rent amount on properties?
And also, is there a way of finding out what the % market appraisal on a property is? In other words, I hear people saying that their house went up 15% in value whereas others say that their house only went up 2%... how do they figure this out? (without having to call realtors/agents etc)
Thank You
Ms_Victoria
Look in the newspaper under real estate transactions and you can see what properties have sold and for what amount. When people say their house increased in value by X% they usually have had an appraisal done
The formula to figgure out how much to rent a house out is as follows. Learn what your market rents are for your area. If the same house rents for $800 a month across the street, yours should rent for (you guessed it) $800 a month. This is of course the simplified version. I like to have more than one property to use but you get the idea.
Notice that it had NOTHING to do with the price of the house, or the monthly mortgage payments.
If your strategy is to buy and hold your properties and rent them out, you need to be sure that you can manage the debt commitment of the property based on what it will bring in. Do not try to decide what to rent it out for after you bought it based on your debt structure.
Know your exit strategy before you buy. Always.
Good luck,
Jeff
Ask a real estate agent. You can charge slightly more than market rent, since it's a rent-to-own. I ask for an extra couple of hundred dollars and give them back double that amount in rental credit.