How do you determine the rent of a house?
By Anish Asokan
@RevivedWarrior (2795)
India
January 10, 2025 5:58am CST
There are times, people think because one is good with number or mathematics, we could determine the rent of a house. There were some old colleagues calling my friend and me asking about the possible rent of certain houses. I was surprised being asked that question. The easiest answer would be checking the rents of the neighbourhood and that should give us an average price.
Although location is the prime factor, neighbourhood and amenities also determine rent factor. Market demand and landlord are the other factors. Sometimes there are landlords who do hike the prices without any logic. Unless , we bargain with them and negotiation goes our way , the prices could be higher side itself. One thing I have figured is most times the rent is average of the locations plus the profit of landlord or if there are challenges with house , then the rent could be little lower but still with a marginal profit for landlord to offset .
Not sure if I missed a factor or criteria . How do you determine the rent of a house?
4 people like this
4 responses
@arunima25 (87991)
• Bangalore, India
6h
Two of my apartments are on rent and we go by the rule of the ongoing rent in the neighborhood. There would be a possibility of hike in the agreement in a year or two.
I think that you have very well covered all the points. I can't think of anything else.
2 people like this
@RevivedWarrior (2795)
• India
2h
Thanks for confirming the common rent logic atleast used in India. Thanks for same!
@RevivedWarrior (2795)
• India
2h
Thanks for confirming the same. Always wanted to verify my thoughts!
@porwest (93829)
• United States
5h
For me, it was typically at the very least, 1% of the value of the property. If the property is worth $200,000, the rent should be $2,000 a month. It also depends on the market you're in and whether or not there are rent caps in place. But generally, the 1% of value to rent ratio is very commonly used. Exceptions might be if I owned, say, a 6 unit complex worth $500,000. I might charge $833 a month based on 500k divided by 6 and 1% of the value of each individual unit, or if the going rent in my area for similar apartments were $1,000 a month, I'd opt for the higher rent.
Granted, there are other factors to consider such as maintenance costs and your desired ROI. My ROI target was typically 8%, but you can generally achieve an 8% ROI on 1% of value being charged.
MOST of the time, rents are raised based on what tenants do. For example, if I incur a lot of repairs or have to do more maintenance to the property because the tenant isn't taking care of it, the rent will have to be raised to recover the costs. If I had good tenants who took care of the property, the rents were raised less often and by smaller amounts. If I had a really BAD tenant, I would do a nuisance raise, which is basically just raising the rent enough that the tenant desires to move out.
1 person likes this
@RevivedWarrior (2795)
• India
2h
I liked the logic here and it makes sense as well. Unfortunately , in some countries including India , I do see landlords increasing the rent regardless whether there were repairs or not. ROI part seems to be logical if the apartment cost is not high. Thanks for sharing this logic , Jim!
@aureategloom (11067)
• Bosnia And Herzegovina
1h
i feel like it often doesn't have any criteria. people just put the price and who can afford it - he gets it. at least that's what i experienced when looking for apartments during college. nothing seemed reasonable so i stayed in my dorm 
