Enter the total annual ground rent into the calculator to determine the ground rent purchase price.
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Ground Rent Purchase Formula
The following equation is used to calculate the Ground Rent Purchase.
GRP = AGR / P
- Where GRP is the ground rent purchase price ($)
- AGR is the annual rent ($)
- P is the percentage factor. This is typically 6% (.06)
To calculate the ground rent purchase, divide the annual rent by 6 percent.
What is a Ground Rent Purchase?
A ground rent is an agreement in which someone owns the building but not the land that building is located on.
How to Calculate Ground Rent Purchase?
The following example outlines the steps and information needed to calculate Ground Rent Purchase.
First, determine the annual ground rent. In this example, the annual ground rent is $2000.00.
Next, the final and last step is to use the formula above:
GRP = AGR / %
GRP = 2000 / .06
GRP = $33,333.33