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.
Net Effective Rent Formula
The following formula can be used to calculate the net effect 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
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 ect.
- Determine the operating costs.
Calculate the monthly cost to operate the unit.
- Calculate the net effective rent
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.