How to Achieve an Optimal Rent Value

Dec 8, 20203 comments

There are many elements of being a homeowner, that can make the position vary in difficulty. Luckily, Mr. Property  has some insight on how to minimize hassle and get the most out of your properties. 

While dealing with tenants can be troublesome sometimes, we find that being well prepared is a sure-fire way to minimize trouble and create a positive outcome for both parties. First, having a well thought out and well-phrased lease agreement is the cornerstone of any successful owner/tenant relationship. Being able to outline all possible scenarios for the duration of a lease agreement is the best way to ensure both parties are protected and in the loop. A superior lease will both protect the homeowner and inform the tenant of all situations and potential troubles.

Determining a fair a reasonable rental value for a property can both be lucrative to the homeowner and attractive to a potential renter. But how does one find such a value? Well, there are a couple of easy ways to configure a fair rent. Firstly, we suggest using a simple rent to value ratio. For example, consider a home that is valued at $175,000 and rents for $1,100 dollars a month. If we divide the value of the home by a year’s rent ($175,000/$13,200) we find the “Rental Yield” to be 13.29%. This means that the home is valued 13.29 times the annual rent it has in the current market. This is similar to the earnings to price ratio in terms of the U.S stock market. The underlying idea behind such a ratio is that a higher number indicates that you can accept a lower level of appreciation in value. A homeowner can make up for low appreciation over the ownership period with higher cash flow over the expenses of ownership provided the homeowner can keep renters in the home and thus keeping vacancy to a minimum. Additionally, if you take this ratio and compare it to the rent of surrounding similar properties, you can find a happy medium between what is both lucrative for you and what is attractive to renters in the area. 

Another avenue to carefully consider when determining rent value and configuring the lease of a property is the use of a lawyer that specializes in real estate and or real estate professional. While we often think we have all the answers it is always wise to consider professionals in the field that can guide our decision-making. There are many outlets to find such an individual including and Mr. Property also uses online sources such as, a management tool that assists us in efficiently communicating home values and ranges of rent possibilities. The tool can highlight key aspects of a homes value. Some highlights include rental averages in the area, housing history, its duration on the market and more which can all add up to the homes true value. Utilizing professionals in the field as a resource for such business is optimal. As always, we suggest that our friends and clients take advantage of such resources, as it is the best way to make sure we make our money work for us and not against us.

images from cozy tool

Sources: “The Rent to Value Ratio-Another Way to Evaluate Rental Homes”



  1. Anonymous

    If some one desires expert view on the topic of blogging and site-building afterward
    i recommend him/her to go to see this website, Keep up the fastidious job.

  2. Anonymous

    It’s hard to come by experienced people for this topic, but you sound like you know what you’re talking about!


    • mrpropertyllc

      Mr.Property strives to continuously learn new information on real estate knowledge. We are happy if we are able to provide reliable information.

      Thank you


Submit a Comment

Your email address will not be published. Required fields are marked *

Recent Posts

Virtual Real Estate Investing – How it Works

Virtual Real Estate Investing – How it Works

Real estate investing is one of the best ways to hedge against inflation, generate consistent cash flow, and take advantage of appreciating assets. In fact, real estate investing is one of the three ways that famed investor Warren Buffet recommends to build...

How Much Money Do You Need to Invest in Real Estate?

How Much Money Do You Need to Invest in Real Estate?

Are you looking to get started investing in real estate? You may have asked yourself or others, “How much money do you need to invest in real estate” without getting a straight answer. The truth is that you don’t need that much money if you want to be a real estate...

When is the Best Time to Buy an Investment Property?

When is the Best Time to Buy an Investment Property?

Buying an investment property is the first step towards generating passive income and wealth through real estate. In a few short years, you could have several investment properties that generate enough income to cover your living expenses. But buying an investment...

Managing an HOA – Everything You Need to Know

Managing an HOA – Everything You Need to Know

Homeowners associations (HOAs) are meant to protect residents in a community and make sure that everyone is enjoying the shared amenities safely and fairly. However, there are times when managing an HOA can be frustrating when working with other representatives and...