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             Determine Your Rental Rate                  

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- To determine what your rent should be you must first know what it cost to run your rental unit or each unit if more than one. This will give you a starting point.

Second knowing what your building expenses are such as Mortgage, Insurance, Business Operations and Maintenance and Repairs.

- Third: How does it compare to other units by location, exterior and interior appearance and amenities. 

-- Putting the above three step together will than determine a range for your profit margin.  You should be in the positive range to some degree. If not you will need to address what and where your property is out of line.  If your margin is showing a negative cash flow  the attention usually would need to be addressed in steps “Second” or “Third” above.    

                                                                   

- In the first step, determining the rent charged for your unit using a utility cost approach can be very time consuming.  Each utility expense would need to be calculated using a combination of calling utility companies,  using formulas, and comparing pass utility records.  Done correctly it can give you some very good  numbers on the cost of expenses incurred for a rental unit.  A much easier approach in determining  what the Utility Allowance costs are to operate a rental unit is explained in our members section of  this website  ( Get Good Tenants,  page: Determine Your Rental Rate / Utility Allowances ).  Also, our HotLandlord's " Property Profile Form ", can further assist you to easily identify and calculate each area for income and expenses to give you a good financial picture of your property.   This is extremelly important to know the health of your property. How much profit your rental is making for you or is it costing you money to keep it operating.  Again if your property is losing money, by completing  the above will help to identify where and what areas need attention.  Once corrected you will be a happy landlord again.     

 

A Utility Allowance Chart is calculated using a number of factors within three main catagories as noted below.

 Note that it is very hard to impossible to get and exact figure in some areas because of volatile markets however, you may have a local office with an allowance chart that comes very close.

1st   rental type: Single Unit. ( Detached )  Meaning the rental unit stands alone and has four outside walls. End Unit  ( Double block or end unit ) having three outside walls. And  an Inside Unit,  having one or two outside walls.

 

2nd  number of bedrooms under each type:

                        Efficiency ( 0 bedrooms )

                        Bedrooms 1 thru 6 

 

3rd   utility allowance for each unit size ( number of bedrooms ) under each of the three rental types.  The  Utilities Allowances should be in each category below:

                               Heating ( oil, coal, electric, gas, propane )

                               Cooking ( electric, gas, propane )

                               Electric  ( basic electric and lights )

                               Water Heating ( oil, electric, gas, coal, propane ) 

                               Water

                               Sewage

                               Garbage

                               ApplianceCost ( refrigerator, range/microwave, window air, central air )

 

View a Sample Utility Allowance Chart on this website: