How Much Should I Charge for Rent? A Guide for Landlords

Renting out a property—whether your own or an investment place—is an excellent way to bring in some extra cash. A typical rule of thumb is that the rent should be about 1% of the property’s worth, but there’s much more to consider. Savvy investors pay attention to market trends, local amenities, seasonal factors, expenses, rent control laws, and what’s included in the rental. So, if you’re wondering, “How much should I charge for rent?” keep reading, and I’ll walk you through it. 

Why Setting the Right Rent Price Is Important

You become a landlord to make income from properties. So, what’s the point of renting your property if you’re not making money and constantly dealing with headaches? The right rent price does two things:

• Cover costs and generate profits: Without understanding the property’s expenses, you risk setting a rent price that does not cover your costs. You need property and rental market data to establish rents and create a margin that generates a profit and covers expenses.
• Attract quality tenants: Setting a rent price at a fair market value helps avoid vacancies and attracts tenants who will take care of the property, be respectful, and follow the lease.

Before renting your property, consider these essential factors to ensure financial success and avoid tenant issues. Setting a rental price involves more than just numbers; you must also understand the desires of local renters. Conduct local research to identify renters’ wants and what they pay for similar rental units.

Rent Calculator: How Much to Charge Using the 1% Rule

When figuring out “how much I should charge for rent?” some investors aim for about 1% of the property’s value. So, if a property value is $300,000, the monthly rent would be around $3,000. However, the national average asking rent is about $1,900, with single-family rentals averaging $2,018, while a typical apartment costs $1,659. These averages vary widely depending on location, local market rents, and comparable properties. Hence, the 1% rule doesn’t consider these factors, so you may have to adjust. A more realistic range might be around 0.8% to 1.1%.

Here’s the formula to calculate how much to charge for rent if you use the 1% rule: 

Purchase Price x Percentage of Property Value = Rental Price

• Purchase Price of Property: Input the property’s selling price.
• Percentage of Property Value: Input the percentage you would like to charge for rent determined by the market value of your property. It is 1% in this case, but it can be higher or lower, depending on your property. 

Factors to Determine How Much Rent to Charge

There aren’t strict guidelines for real estate investors on how much rent to charge. However, some valuable methods help you figure it out, such as market trends, exploring comparable properties and rents, and comparing amenities. Let’s delve into other methods to employ.

1. Comparable Properties & Market Trends

The first step in learning how to determine rent prices is to research property values, rent prices, and the local rental market. Search online for criteria like the number of bedrooms and bathrooms, pet policies, neighborhood amenities, and tenant parking. Also, consider how rents vary by which floor they’re on. A first-floor unit may rent for more money than something on the third floor. 

Figuring out how much you can rent your house for should be thorough, so also do a rental market analysis (RMA) to scope out the local market. The RMA should evaluate the neighborhood, comparable properties, rent per square foot, and local amenities like accessibility to quality schools, transportation, and shopping. Compare your property and come up with a competitive rental price.

2. Rental Property Characteristics & Amenities

The features, conditions, and amenities in your rental make a difference in attracting tenants and setting prices. Well-designed properties equipped with excellent amenities rent for higher prices. Two types of amenities impact how much you can rent your house for:

• On-site amenities: These may include a swimming pool, game room, valet parking, fitness center, or on-site laundry center.
• In-unit amenities: These are only accessible within the rental units. They may include a terrace, washer and dryer, walk-in closets, dishwashers, central air, and quality finishes.

When inventory is low, renters may acquiesce to some features. Make smart choices for upgrades by checking out what’s popular and in demand in your area, but don’t go crazy. You need to stay on budget and get a return on the investment in amenities. Here are some factors and amenities that affect your rent price:

Increases Rent	Decreases Rent
Swimming pool Fitness center Elevator On-site parking Security or doorman Shared or in-unit washer/dryer Allowing pets	Walkup building No reserved parking Lack of security No community amenities (e.g., pools, game room) No pets policies Outdated carpets and features

3. Seasonality

Renting is seasonal-dependent for short-term and mid-term Airbnb-type rentals. The peak season is often during the summer unless your property is in a location with winter amenities like skiing and snowboarding. For year-round residential properties, listing a rental in winter may have fewer applicants since people don’t like to move in the snow and cold. However, you may have less competition with fewer rental units on the market, allowing you to charge higher rent. 

4. Rent Control Laws 

State and national landlord-tenant laws outline what both sides can expect from the rental agreement and the property’s condition. Some areas have rules about rent control, too. Each municipality imposes rent control restrictions, so you might have different requirements if you own rental properties in multiple states. These laws restrict increases in the price of rent, so you need to clearly understand them before you set your rent prices the first time.

There are currently seven states and Washington, D.C., that include municipal rent control and only two with statewide regs:

States	Regulations
California	Statewide rent control as of January 1, 2020 Annual rent increases are limited to 5% plus a cost-of-living adjustment of 5% (maximum increase of 10%) “Just cause” eviction protection restrictions
New York	Municipal rent stabilization and rent control laws New York City follows the Maximum Base Rent (MBR) system The Division of Housing and Community Renewal (DHCR) determines the maximum base and collectible rents for individual apartments, and adjustments are made biennially
New Jersey	Municipal rent control laws Rent increase limits are 2% to 6% annually, depending on the municipality and consumer price index Rent increases are prohibited during an active fixed-term lease
Maryland	Municipal rent control laws Takoma Park’s rent stabilization law (City Code Chapter 6.20) restricted rent increases to 3.4% beginning July 1, 2024, through June 30, 2025
Oregon	Statewide rent control laws (SB 608) Rent increase restrictions established annually The allowable rent increase for 2025 is 10%
Washington, D.C.	Rental Housing Act of 1985 (D.C. Law 6-10) Limit rental increases to once per year Maximum rent increase is 2% more than the Consumer Price Index, with a cap of 10% Rent increase cap of 5% for elderly or disabled tenants
Maine	Municipal rent control laws Rent increase limitations in Portland based on local inflation rate Landlords are required to give 30-45 days’ notice of a rent increase and 90 days in Portland
Minnesota	Municipal rent control laws Rent increase limited to 3% annually without approval from the Saint Paul government Exceptions to the 3% limit for self-certification, just cause vacancy, and staff determination

5. Financial Needs 

Evaluate the ongoing, seasonal, and unexpected costs of owning and managing your property. You’ll want to set the right rent price that covers all expenses, helps generate cash flow, and brings in great tenants. Some of the most common expenses to account for are as follows:

• Mortgage payment: Unless you purchase the rental property with cash, you will owe your lender monthly principal and interest. Ideally, your rental income will cover these payments.
• Maintenance and repairs: Some maintenance costs are regular and ongoing, so you can include these in your property evaluation and due diligence. However, unexpected expenses and repairs are inevitable and must be accounted for within your plans, so add them to your budget.
• Property taxes and insurance: You may pay property taxes escrowed into your monthly mortgage payment or separately, depending on how you purchased the property. Rental property insurance protects property owners from liabilities like tenants, weather, or crime. These also may be escrowed or paid independently.
• Employees and vendors: Investors who own multiple rentals or an apartment complex often hire part-time or full-time staff members to help with administration, maintenance, marketing, or other needs. Your budget must include this expense. Vendors may include general contractors, plumbers, electricians, and maintenance technicians.
• Property management: Many landlords hire a property manager or company to outsource all management tasks, while others use property management software.

Managing rental properties can be a hassle, but instead of hiring a full-time management company, consider using property management software. Take Avail, for example—it’s an all-in-one tool that helps with rental applications, tenant screening, online rent collection, and maintenance tracking. It even includes a rent analysis feature to help you decide on competitive pricing for your property.

6. Rental Inclusions

When figuring out “how much I should charge for rent,” it’s vital to know what’s included in the rent price. Throwing in some unique perks can be a win-win for everyone. It helps landlords snag good tenants and can lead to higher profits. Here are a few examples of rental inclusions to consider:

Utilities	Include some utilities (e.g., heat, hot water, electricity) to make the costs more affordable for renters while minimizing unpredictable payments.
Maintenance	Clearly define who is responsible for maintenance tasks like lawn care, snow removal, and minor repairs like changing light bulbs. Providing more maintenance services will justify a higher rent price.
Reserved or covered parking	Reserved or private parking spots are especially appealing in areas with limited street parking or high traffic. Landlords can leverage parking options as a premium feature to attract tenants willing to pay extra for convenience and security.
Pet-friendly policies	Allowing tenants to have pets within the rental property will expand the pool of prospective tenants. Landlords can capitalize on this inclusion by charging pet fees or rent, increasing cash flow while mitigating the risks and costs associated with pets (check state laws on charging pet fees).
Flexible lease terms	Provide tenants with options for month-to-month leases, shorter or longer lease durations, or even rent-to-own options (if you plan to sell). By offering this flexibility, you’ll appeal to a broader range of tenants.

7. Rent Concessions

Rent concessions are perks that help bring in or keep tenants, especially when the rental market is slow and many vacant units are available. Adding concessions can be a smart way to draw in tenants by adding value or reducing their initial costs. Rent concessions can include the following: 

• Discounted rent for a specified period (i.e., one month of free rent)
• Waived application and background check fees
• Complimentary amenities (e.g., gym memberships, parking spaces)
• Flexible lease terms (e.g., shorter or longer lease durations)
• Reduced rent for lease renewals
• Complimentary upgrades or renovations to the rental unit
• Incentives for early lease termination or lease extensions

Average Rental Prices Per State 2024

Rental prices vary drastically throughout the US and within individual neighborhoods and cities. For instance, the median rent price in the US ranges from $831 in West Virginia to $1,868 in Hawaii, with the average asking rent of $1,900 monthly. 

Learn more about the median cost of rent throughout the states below:

State	Average Rent Price	State	Average Rent Price
Alabama	$925	Montana	$974
Alaska	$1,345	Nebraska	$987
Arizona	$1,308	Nevada	$1,382
Arkansas	$868	New Hampshire	$1,336
California	$1,856	New Jersey	$1,577
Colorado	$1,594	New Mexico	$966
Connecticut	$1,374	New York	$1,507
Delaware	$1,286	North Carolina	$1,093
District of Columbia	$1,817	North Dakota	$912
Florida	$1,444	Ohio	$945
Georgia	$1,221	Oklahoma	$934
Hawaii	$1,868	Oregon	$1,373
Idaho	$1,061	Pennsylvania	$1,110
Illinois	$1,179	Rhode Island	$1,195
Indiana	$967	South Carolina	$1,065
Iowa	$914	South Dakota	$878
Kansas	$986	Tennessee	$1,047
Kentucky	$902	Texas	$1,251
Louisiana	$996	Utah	$1,302
Maine	$1,009	Vermont	$1,149
Maryland	$1,598	Virginia	$1,440
Massachusetts	$1,588	Washington	$1,592
Michigan	$1,037	West Virginia	$831
Minnesota	$1,178	Wisconsin	$992
Mississippi	$896	Wyoming	$933
Missouri	$957

Frequently Asked Questions (FAQs)

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Bringing It All Together 

Deciding how much to rent your house for can be a real challenge, whether you’re a seasoned investor or renting a room. If you set the price too high, you might scare off potential renters and miss out on income. Conversely, pricing it too low means you won’t cover your costs and could be in a tricky financial situation. Check out the points in this article to help you figure out a reasonable rent estimate. Don’t forget to use the rental rate calculator to find a sweet spot that keeps your vacancies low and your profits up.

If you have any tips or experiences to share about how much rent you should pay, feel free to comment below!