You as a homeowner feel so afraid you determine the price of home rental too expensive or too cheap? Just use the property renting cost calculator! Renting is an option for people who don’t have their own home.
This is reasonable, considering that currently buying a house requires a lot of money. The more strategic the house and the area of the house, the more expensive it is. That’s what makes the house rental business still profitable today.
Determining the price of house rental business is an important first step for those who want to get into the house rental business, be it daily, monthly or annually. If the price is too high, it becomes difficult for the tenants to reach an agreement.
Conversely, when the price is too low, you as a businessman can get a loss. Well, the good news is to determine the right rental price, you can use a property renting cost calculator, you know. What is it and how is it calculated? Check it out below!
About Property Renting Cost Calculator
What is meant by a property renting cost calculator is a calculator used to calculate the exact price or cost of renting a property. In the calculator there are several formulas that can help you determine the right rental price, not too expensive and not too cheap.
One thing that must be calculated is the cap rate, namely the level of capitalization. This one calculation can be done by dividing the net operating income and then dividing it by the purchase price. In general, the cap rate also applies based on the type of property.
For vacant land, the cap rate is 0.5% to 2%, houses are capped from 3% to 5%, shophouses and office buildings are capped from 6% to 9%, kiosks and shophouses are capped from 5% to 10%. The last is apartments and condominiums 7% to 12%. From the percentage cap rate, you can determine the annual rental rate.
Calculating Rental Costs with the Calculator
After you know the cap rate, here is the property renting cost calculator formula that you must know:
Rental price in rupiah/ year = Property price x Cap Rate (%).
If the property being rented out is a house, the cap rate is 3% to 5%. For example, the price of your house is 34,000 USD, the maximum rental price is 5% x 34000 USD, the result is 1700 USD a year. If rented per month, the rental fee is around 141 USD a month.
It’s different if the property being rented is a condominium or apartment, the cap rate is 7% to 12%. For example, the price of your apartment is 40,000 million, so the maximum rental fee is 12% x 40,000 million, you get a rental fee of 4800 USD a year or 400 USD a month.
If your property is a shophouse with a price of 94000 USD, the cap rate is 6% – 9%, the average rental price is 7% x 94000 = 6580 USD per year or 548 USD a month.
Things to Consider
In addition to calculating rental costs with a property renting cost calculator, you also have to consider several things that also affect property rental prices, such as the following:
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View Similar Market Prices
You should look at similar market prices and current property cost around your home location.
Do some research whether the set price is normal or not. By doing good research, you can give tenants an idea why your rental property is more expensive than competitors. Why is that? That’s because it’s not uncommon for prospective tenants to be able to compare your property with competitors. That’s when you have to provide reasons that are logical and acceptable to prospective tenants.
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Adjust to Facilities
If you don’t find the same specifications as the property you own, you can make a different rental price.
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Facilities can be a price differentiator. For example, competitors do not have air conditioning, mattresses and so on, while yours provides them. You can provide different rental fees from these competitors.
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Consider Location and Conditions Around the House
Indeed, the rental fee is calculated using the cap rate, but there are several things that also determine cost of the rental.
This is the strategic location and conditions around the house. Although you can charge rent cost with a cap rate, the location of houses at certain points such as near rivers, streams, cemeteries or home industries will be avoided by many tenants.
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It is not surprisingly that the cost of renting property in these locations is cheaper and more affordable.
Tenants will consider the risk factors of living in that house such a flooding, prone to noise and the atmosphere is not good and so on. You should prioritize renting benefits and aspects above.
It’s okay for you to set rental costs with renting cost calculator, but there will be many other things to be considered, because they affect the high cost of your property rental as well.
