Enter the lease term, monthly rent, # of rent-free months, and operating costs per month into the net effective rent calculator. The calculator will display the net effective rent per month and year.
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Net Effective Rent Formula
The following formula can be used to calculate the net effective rent of a rental property.
NER = R * L - R*RF - O*L
- Where NER is net effective rent
- R is the monthly rent
- L is the length of the lease in months
- RF is the total number of rent free months
- O is the operating costs per month
Net Effective Rent Definition
Net effective rent is a measure of the total rent of a property after rent-free months and operating costs have been taken into account.
How to calculate net effective rent?
How to calculate net effective rent?
- Determine the monthly rent and length of the lease
This is the flat monthly rate tenants pay for the use of the space and the number of months.
- Determine any free months
Many leases included 1 free month without rent to be used at any point. This is to help with unexpected job loss etc.
- Determine the operating costs.
Calculate the monthly cost to operate the unit.
- Calculate the net effective rent
Calculate the net effective rent using the formula above.
FAQ
Net effective rent is a term used in real estate to describe the actual rent received by a landlord after all expenses are accounted for.
Net effective rent should be 10-15% less than the normal rent rate on average.