Enter the rent of comparable unit 1 ($), the rent of comparable unit 2 ($), and the rent of comparable unit 3 ($) into the calculator to determine the Fair Market Value Rent.
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Fair Market Value Rent Formula
The following formula is used to calculate the Fair Market Value Rent.
FMR = (R1 + R2 + R3) / 3
- Where FMR is the Fair Market Value Rent ($)
- R1 is the rent of comparable unit 1 ($)
- R2 is the rent of comparable unit 2 ($)
- R3 is the rent of comparable unit 3 ($)
To calculate the fair market value of rent, sum the rent of comparable units, then divide by the number of units.
How to Calculate Fair Market Value Rent?
The following example problems outline how to calculate Fair Market Value Rent.
Example Problem #1
- First, determine the rent of comparable unit 1 ($). In this example, the rent of comparable unit 1 ($) is given as 5000 .
- Next, determine the rent of comparable unit 2 ($). For this problem, the rent of comparable unit 2 ($) is given as 4000 .
- Next, determine the rent of comparable unit 3 ($). In this case, the rent of comparable unit 3 ($) is found to be 3000.
- Finally, calculate the Fair Market Value Rent using the formula above:
FMR = (R1 + R2 + R3) / 3
Inserting the values from above yields:
FMR = (5000 +4000 + 3000) / 3 = 3000.00 ($)
FAQ
What factors can influence the Fair Market Value Rent of a property?
The Fair Market Value Rent can be influenced by various factors including the location of the property, its size and condition, the current demand for rentals in the area, and any additional amenities or features the property offers.
How often should Fair Market Value Rent be recalculated?
Fair Market Value Rent should be recalculated periodically, especially if there have been significant changes in the local real estate market, if the property has been upgraded, or at least once a year to keep up with market trends.
Can the Fair Market Value Rent differ significantly from the current rent being charged?
Yes, the Fair Market Value Rent can sometimes differ significantly from the current rent being charged, especially if the rental market has experienced rapid changes or if the current rent was set without a thorough market analysis. Landlords and property managers should assess and adjust rents accordingly to remain competitive and fair.
