Enter the monthly rent amount and the number of months remaining on the lease into the calculator to determine the tenant buyout amount.
Tenant Buyout Formula
The following formula is used to calculate the tenant buyout amount:
TB = (MR * M) + (MR * M * P)
Variables:
- TB is the tenant buyout amount
- MR is the monthly rent amount
- M is the number of months remaining on the lease
- P is the penalty percentage (expressed as a decimal)
To calculate the tenant buyout amount, multiply the monthly rent amount by the number of months remaining on the lease. Then, multiply that result by the penalty percentage. Add the two results together to get the final tenant buyout amount.
What is a Tenant Buyout?
A tenant buyout is a legal agreement where a landlord offers a tenant a certain amount of money to voluntarily vacate a rented property, typically before the lease term ends. This usually happens when the landlord wants to renovate or sell the property or rent it out at a higher rate. The amount offered in a buyout can vary greatly and is often negotiable. It may cover moving expenses, a new security deposit, or even several months’ rent at a new location. The tenant is not obligated to accept the buyout offer and can choose to stay in the property until the lease term ends. If the tenant accepts the buyout, they will typically sign a legal document stating they will not sue the landlord for wrongful eviction.
How to Calculate Tenant Buyout?
The following steps outline how to calculate the Tenant Buyout.
- First, determine the current monthly rent ($).
- Next, determine the number of months remaining on the lease.
- Next, calculate the total remaining rent by multiplying the current monthly rent by the number of months remaining.
- Finally, subtract any applicable discounts or incentives from the total remaining rent to get the Tenant Buyout amount.
- After completing the calculations, double-check your answer to ensure accuracy.
Example Problem:
Use the following variables as an example problem to test your knowledge.
current monthly rent ($) = 1500
number of months remaining on the lease = 6
