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 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.
