If you’ve been asking yourself the same question, “how much can I rent my house for?” stop right there—we’ll show you how to calculate it.
It is one of the most pressing concerns for any rental property owner. The slightest miscalculation can spell the difference between a loss and a profit. As an investor, your goal is to not just get a good return on your investment but also to create a positive monthly cash flow from a rental property.
Table of Contents
- 5 Things to Consider Before Renting Out Your House
- How Much Can I Rent My House for: 3 Ways to Calculate
- How to Find Tenants or Guests
- Preparing Your House for Rent: 3 Tips
The decision to devote yourself to real estate investing requires commitment and keen attention to detail. The same applies to those who wish to take things one step further and become landlords.
What seems to encourage investors to become landlords is profitability. As far as rent goes, you need to decide on the rent price—and it needs to be fair.
It’s easier said than done because you need to consider several factors. You must come up with a price that lets you make a decent profit off your rental property and ensure your tenants can afford your rate. It is regardless of whether you use the home as a long term rental or rent out a room and get it listed on Airbnb.
We’ve taken the time to look into the matter in greater detail so we can help you answer the critical question, “how much can I rent my house for?”
Related: You Don’t Need Excel Spreadsheets, Just This Short Term Rental Calculator
5 Things to Consider Before Renting Out Your House
Before you go on Zillow to look for a property to buy, you need to think about other factors involved in starting a rental property business. There’s more to it than just asking yourself, “how much rent can I get for my house?”
Real estate investors, like you, who are aspiring landlords must consider a few crucial factors before putting your house up for rent, whether it’s as a long term rental or for Airbnb. We’ve highlighted the most important ones below:
1. Investment Strategy
As an investor, you will need to think about which investment strategy will work best for you. While there are a few good options out there, you need to carefully and thoughtfully pick one. It should be the option that best aligns with your investment goals and current financial situation.
Generally, real estate investors who want to start a rental property business can choose between going with a long term rental strategy or having the property listed on Airbnb. Another good option is the BRRRR method.
Long Term Rental Strategy
Long term rentals are rental properties that are rented out for periods of six months or more. Many investors choose to go such a route because it is safer. It gives them a guaranteed monthly income for a fixed period.
Another reason why a lot of landlords opt to go the long term rental route is that it saves them money and time on utilities and regular maintenance. When you rent out a house as a long term rental, the tenants typically take care of the monthly utilities and small-scale maintenance needs. It rids you of the need to deal with such things every month.
However, as a rental strategy, long term rentals don’t earn as much as vacation rentals do because landlords don’t charge nightly rental rates for their properties. In a way, it’s kind of a hit-or-miss relationship. You list your property and hope that you get a decent tenant that will take good care of your house and make their payments on time.
If you end up with a bad tenant, you will need to deal with that tenant for at least six months. That’s six months’ worth of headaches and inconveniences. It is why as a landlord, you should come up with a good tenant screening strategy up your sleeve. Knowing how to evaluate potential tenants will help you minimize the headaches.
Short Term Rental Strategy
Short term rentals, or vacation rentals, are rental properties that are listed on Airbnb, Vrbo, and other similar platforms. The properties are typically rented out for shorter periods, usually from several days to a few weeks at a time. Vacation rental owners typically charge nightly rates for rooms or houses to accommodate tourists and visitors.
Vacation rentals continue to grow in popularity nowadays. What makes them more appealing is they provide travelers with a more affordable and comfortable alternative to expensive hotels and resorts.
During the pandemic, when remote work became the norm, short term rentals took off in 2021. As travel restrictions were eased and lifted one by one, a lot of remote workers took advantage to hit the road for a change of scenery. The mass implementation of work-from-home arrangements allowed them to go on a “vacation” and still get their work done.
According to Business of Apps, Airbnb reported a 73% year-over-year increase in revenue to $5.9 billion in 2021. Around 300 million bookings were made on the platform in the same year, bringing that number to a 55% year-over-year increase.
Now that we’re in a post-pandemic era, vacation rentals are still growing stronger than ever. It makes short term rentals a great option for those with extra rooms in their houses or real estate investors like you.
For the more advanced and experienced investors, there’s also the BRRRR method. BRRRR stands for Buy, Rehab, Rent, Refinance, and Repeat. It involves buying distressed property and renting it out to make enough money for a cash-out refinance to buy other investment properties.
Let’s break it down:
Just like any real estate investment, you need to buy a property to get the strategy off the ground. But you don’t just buy any property. It must be undervalued with excellent potential so you can get a good return on your investment.
The rehab stage is where you get the property fixed to get it up to code. When working on home improvements, remember you’re doing it to get a good ROI, so don’t go overboard with your spending. Just get enough done that it will let you charge decent rental rates that will give you a positive cash flow.
The BRRRR strategy is similar to house flipping, with the only difference being your intention to rent out the property and not sell it (at least not in the near future). Once the property is fixed and up to code, get it listed as a rental property and start marketing it. If you’re clueless about how to set the right rental rates, try Mashvisor’s rental calculator.
The refinance step is what makes the BRRRR method different from other real estate investing strategies. Cash-out refinancing lets you pay off your loan and use the remaining money as a down payment for another investment property. First, ask your bank about the requirements for cash-out refinancing before proceeding.
If you do things right and everything is in order, you can repeat the process and start expanding your rental property business.
2. Hiring an Agent vs Doing It by Yourself
Even though there are many private hands-on landlords in the US rental industry, it can be too much for a lot of people to handle, and we get it. It’s time-consuming, and it requires you to be fully dedicated and committed to it.
For that very reason, many landlords consider hiring a property manager to help them manage the property and ensure that the work will be done correctly.
Why Hire a Property Manager?
Here are a couple of scenarios where you should consider such an option:
- You own multiple rental properties.
- You don’t live near the property you’re renting out.
- You don’t feel like you can successfully manage it yourself.
Quite frankly, the above are common scenarios that many landlords nowadays may encounter. Perhaps, they even apply to you. It’s no surprise that a lot of them choose to hire a professional. After all, by hiring a property manager, owning a rental property business becomes easier.
Here is what the property manager will be responsible for:
- Collecting rent and property fees from tenants
- Paying for property expenses (taxes, insurance premiums, mortgages, and the like)
- Arranging contracts and filling vacant units
- Inspecting properties
- Dealing with potential disputes
As you can see, deciding to hire a property manager can take a huge load off your shoulders. It’s up to you—the investor—to decide whether it is the best course of action for your long-term plans, though.
The Drawbacks of Hiring a Property Manager
Of course, just like with all strategies, hiring a property manager comes with certain drawbacks. There are several benefits to working with one. However, you may also find that doing things by yourself may be more beneficial, especially under the following circumstances:
Determining How Much Management Control Goes to Both Parties
When it comes to rental property management, the concept of “my house, my rules” doesn’t always apply. Working with a property management company will require you to set aside some of your preferences and knowledge in favor of their experience and expertise.
If you choose to work with a property manager for your long term or vacation rental, you must understand that you will need to relinquish some control over your property. It may become a source of frustration and conflict for you, so give careful thought to it first before making any final decisions.
Keeping Operating Costs to a Minimum
Another disadvantage to working with a property manager is their fees. Hiring a professional property manager entails certain fees that will add up to your operating costs. Aside from the monthly fees, some management companies also charge leasing fees, cancellation fees, maintenance fees, and renewal fees.
Before committing to a contract, make sure you whip out your calculator first and crunch the numbers if it will still be financially beneficial for you or not.
Hiring the Wrong Team
Lastly, there’s also the matter of hiring the wrong set of people. Your calculator can tell you that you can still make a profit despite the costly property management fees. But if you hire the wrong people, you’re still setting yourself up for failure. If the team you hire doesn’t do its job well, it will result in unhappy tenants and a negative on your bottom line.
Set high standards when sorting through your options. Ask other rental property owners and real estate investors for recommendations. Do your research to avoid any regrets down the line.
3. Landlord Laws and Short Term Rental Regulations
The title “landlord” carries many different responsibilities. However, the responsibilities are all based on one thing — respecting the law.
Long Term Rentals
If you are new to the real estate business, you should definitely take the time to get more familiar with the applicable landlord-tenant law if you plan to ernt out your property as a long term rental. The said law was created solely to regulate the rights, communication, and duties that fall on both parties.
It is important to note that states impose their own set of regulations for long term rentals but they’re all generally meant to protect the rights of all parties involved.
As far as the landlords are concerned, the duties are divided into the following:
- Security deposit
- Disclosure of owner
- Delivering possession of the unit
The landlord should research and respect all the abovementioned points after the signing of the contract.
One more important thing to note:
The US housing market is vast, meaning there’s a high likelihood that landlord-tenant laws may differ across different states. It is why the landlord must inquire about any additional rules and regulations that might’ve recently come into effect.
Short Term Rentals
On the other hand, if there’s a spare room or an entire house you want to rent out as a vacation rental on Airbnb, you need to also look into the local short term rental regulations. Airbnb and other similar vacation rentals may be popular but they also face some resistance in certain places.
It pays to be aware of such regulations so you avoid any legal issues in the future. Before thinking about rental charges and “how much rent can I get for my room or house on Airbnb,” think about whether it’s legal to set up a vacation rental in your area in the first place.
Related: How to Use Airbnb Predictive Analytics to Earn a High ROI
4. Applying for Mortgage Lender’s Permission
Suppose you’ve been using the house primarily as a residence since you bought it and now you decide that you want to start renting it out. You must know that you cannot start a rental property business overnight.
If you purchased your current home through a mortgage and are still repaying it, you’ll need to consult with your lender and let them know what you plan to do with your property.
In other words: you’ll need your mortgage lender’s permission to rent out your property.
On the other hand, if you bought your property as an investment—with the sole intention of renting it out—you should inquire about the buy-to-let mortgage.
Related: How to Get the Best Mortgage Rate for Investment Property in 2023
5. Expected Rental Income
The last—and perhaps the most crucial consideration—is the profit you can expect from renting out your house (or at least a spare room if you’re listing on Airbnb). Your primary goal for getting into the rental property business is to make a profit, after all.
Of course, it will only be possible by employing a good strategy and calculating the potential rental income in time.
Many landlords enter the rental business blindly, expecting high returns. However, it’s not always the case. For a rental business to take off, you need to put the numbers down on paper and calculate your potential return on investment. In other words, know what to expect.
Related: 9 Factors That Will Affect Your Rental Rate Calculation
How Much Can I Rent My House for: 3 Ways to Calculate
There’s more than one right answer to the question, “how much rent can I get for my house?” An experienced investor knows that there are numerous ways to calculate your rent.
As mentioned earlier, before you proceed with your plans, you’ll need to calculate how much you should charge for rent—and there’s more than one way to do that.
With that said, here are three ways in which you can calculate rent:
1. According to Your Finances
One of the common methods of calculating rent is based on taking your finances into account.
In essence, you will need to figure out how much you need, and write down your mortgage payments, taxes, insurance, and expenses. Don’t forget that the maintenance of your house can eat up to 20% of your profit—depending on the property’s size and state, of course.
The above method is a very subjective way of calculating rent because you are computing based on your own monthly needs. The downside is that you might be setting a high price on your property, which may be expensive for the market you’re in.
2. By Using Comps
Another common way of figuring out how to calculate your rent is using rental comps.
Unlike the previous method, which is based on your own expenses, using rental comps to calculate the right rental rate for your house will be a more reliable way of setting a price.
You should start by looking at other houses that are “comparable” to your own property in terms of size, age, features, and location.
It may take more time, but there are several ways you can search comps in your area. You can do it online or through market listings, for example.
3. Mashvisor’s Rental Property Calculator
The most accurate method when it comes to calculating rent for your house would be to use one of our tools—Mashvisor’s rental property calculator.
Also known as the investment property calculator, it’s an online tool aimed at helping real estate investors calculate the potential rent for their homes.
How does this one work?
You just put in the property’s basic information, and the calculator does the math for you. It only takes a few minutes to give you a price for your real estate property that meets your needs—and doesn’t deviate from the market’s average.
Why should real estate investors use the calculator?
Well, for starters, relying solely on traditional methods of compiling data and calculating rent is beyond time-consuming. It would take too much time, and there’s a risk that the calculated amount will not be correct.
With Mashvisor, the process can be done in minutes and is highly accurate and realistic. Remember that the tool isn’t exclusively intended for beginners. They can be beneficial also to professional investors who want fast and accurate results.
Get started on your 7-day free trial with Mashvisor today to know how much rent you can get for your house and get you on your way to a thriving real estate investing career.
How to Find Tenants or Guests
Now that you’re certain you want to rent out your property, it’s time to take care of another matter:
How to find guests and tenants? Where should you look?
There are many ways to handle it; here’s what we recommend.
Word of Mouth
If the community where your property is located is relatively small, and the word of you preparing your home for renting has gone out, you can use that to your advantage. In smaller communities, word of mouth can be a very effective way of finding future guests and long term tenants.
For starters, they can be acquaintances or friends who may require accommodation for a few days. After a while, those who stayed at your property can spread a positive word about it and keep the ball rolling.
The “traditional” way of letting people know you’re renting out your home is by putting an ad on rental websites. Of course, you will be sharing the platform with fellow investors and landlords—but don’t see it as a downside.
This way, you get to see what the others offer and keep yourself updated with what’s going on in the rental market. Luckily, there are many credible websites you can go to in this department.
Related: Top 7 Qualities of the Best Real Estate App for Property Investors
Perhaps, the fastest way to spread the word and advertise your rental property is to share the news on social media. The good thing about it is that virtually everyone already uses social media; reaching your target audience won’t be a problem.
You can also use multiple platforms if you want a more comprehensive approach or are in a hurry to rent your property. For example, many landlords use Facebook Marketplace to advertise their properties for rent.
Preparing Your House for Rent: 3 Tips
Finally, you will need to take care of your house’s interior and exterior. So, a few touch-ups to prepare the property for renting and make any future tenants feel at home may be in order.
Here are some tips on handling them:
1. Inspect Your House
Doing a home inspection is arguably the single most essential step in preparing a home for rent. You can do it independently, but do note that you must take the time to go through every corner of the house.
Inspect everything—from rooms, ceilings, and floors to lights and pipes—that can pose a problem for the future tenant. If you find something that needs to be repaired, take care of it immediately.
Trying to hide the issue or leaving it for the tenant to handle will only cause trouble down the road.
Everything you don’t need—or won’t be important to your future tenants—should be put away. Why? A cluttered space leaves a very bad impression. Even worse, it makes it harder for future tenants to feel comfortable and leaves them with not enough room for their belongings.
So, if it is a home you used to live in, get rid of your clutter and anything that can break or get damaged by your tenants, for that matter.
The same rule applies to furniture. Get rid of extra tables, beds, and chairs that may make it harder for your tenants to move around.
If you’ve decided that renting out a house is something you’ll be doing for the long term, you should know when to upgrade your property. Upgrading is a broad term, though, and can apply to many things.
For starters, it can include buying new appliances and gadgets, but it can also mean investing in quality furniture. Depending on the circumstances, it may even apply to the complete renovation of the property.
But ultimately, it’s something that needs to be done.
How Much Rent Can I Get for My House: Conclusion
We’ve managed to answer the question, “how much can I rent my house for?” Now, let’s recap what we’ve learned so far.
By reading this article, we’ve reached the conclusion that calculating the rent for your home can be done in more than one way. But before you even put those numbers down on paper, there are a couple of things to consider.
Future landlords should think about their long term strategy, local landlord laws, applying for permission, and potential income. They should also think about whether they can do it on their own or if they should get help from a professional property manager.
As for calculating rental rates, again, it can be done in a couple of ways.
You can do so based on your own financial needs—or through researching comps. However, the most reliable method would be to use Mashvisor’s Rental Property Calculator.
After you decide to rent out your home, you’ll need to advertise it. It can be done through rental websites, social media—or even by word of mouth. It depends on the feedback you get, of course; it should be obvious.
Finally, you’ll need to take care of a couple of touch-ups. So, inspect your house for possible issues, declutter, and know when to upgrade.
With Mashvisor’s help, real estate investing can be surprisingly straightforward.
Our Property Finder can help you search through thousands of properties in the US and find the most suitable one within minutes. And nothing beats researching the US housing market from the comfort of your home; trust us on that.
Learn about how Mashvisor can help you find out how much rent you can get for your house and locate the best deals in the most profitable markets by scheduling a demo now.