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Considering renting out your property for extra income? Let’s crunch some numbers to ensure you set the right price for maximum return.
1. Monthly Expenses:
- Mortgage: $1,500
- This is your monthly payment towards the loan you took to buy the property.
- Property Taxes: $300
- Regular taxes paid to the local government based on your property’s assessed value.
- Insurance: $100
- Coverage costs for protecting your property against damages and liabilities.
- Maintenance: $200
- Estimated monthly costs for repairs, upkeep, and other routine maintenance.
Total Monthly Expenses: $2,100 - This is the sum of all the above expenses.
2. Desired Monthly Profit:
- Desired Profit Margin: 20% of expenses
- The percentage of profit you aim to make above your expenses.
- Desired Profit: $2,100 x 20% = $420
- The actual dollar amount you want to earn as profit each month.
3. Minimum Monthly Rent:
- Minimum Monthly Rent = Total Monthly Expenses + Desired Profit
- This formula ensures you cover your costs and achieve your profit goal.
- Minimum Monthly Rent = $2,100 + $420 = $2,520
- The least amount you should charge your tenants to meet your financial objectives.
By calculating your monthly expenses and desired profit margin, you can determine the minimum rent you should charge to maximize your return.
Need help with the calculations or want to explore rental opportunities further? Contact us for personalized guidance!
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