Fair Market Rent: Everything You Need to Know as a Beginner

[Antonio Cucciniello]

What is fair market rent?

It is how much you can charge for renting out a home or unit based on a few factors we will discuss here.You need to know the fair market rent because it tells you how much you can make per month from a property when renting it.

How do you calculate fair market rent?

There are 3 main factors and 5 minor ones.

1. The first factor is the number of bedrooms. Typically, if a home has more bedrooms, it will increase the rent and if it has fewer bedrooms the overall rent will decrease.

2. The second factor is the number of bathrooms. Typically if a home has more bathrooms it will increase the rent because it allows for more privacy when taking your *****. If there are fewer bathrooms that means less privacy and less rent.

3. The third major factor is the size. The bigger the property, typically more you can charge for it. And vice versa. This number is measured in square footage. We are going to use these three factors in our calculations later!

4. Factor number 4: the location. This means, what city is it in and what area of the city, all the way down to the nearest block. Sometimes a few blocks can make a rental be worth so much more. For example, having a rental right outside a train station might be worth more than a rental 5 blocks away from the train. Closer to points of interest like tourist attractions, transportation, jobs all typically increases the rents.

5. Factor 5: Condition. If you are renting out a brand new place then you can charge more for the place than you can for something that looks and is old.

6. Factor 6: The type of house. If you rent out a whole home, it might be able to rent out more than renting out an apartment in an entire building because its a shared space.

7. Factor 7: Amenities. The more things the property has to offer like a garage, or lawn space, a backyard, a pool, extra storage space can increase the rents vs a place that does not have those things.

8.Factor 8: This one is only in select locations, but rents can increase depending on the timing of the year. For example in New Jersey, the rental properties in the Jersey shore charge a lot more when its beach season, but when its the winter, its a ghost town and the rents drop.

I hope this helps any beginner like myself, who struggled with not knowing how to calculate this number. Investors out there, I would love some feedback if you think I am missing anything!