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In reply to the discussion: A Note on Tax Exemptions for Churches [View all]MineralMan
(147,837 posts)recovering those, along with a profit, if possible.
Let's say he or she owns a 16-unit apartment building with uniform apartment size. One factor is the property taxes on that building. Typically, the tax will be divided by 16, and the result becomes part of the rent calculation. Servicing any mortgage on the building is handled the same way. Estimates are also made about cost of maintenance, HVAC maintenance and potential replacement needs. Other building maintenance, like roofing replacement, appliance replacement, and other work is estimated and prorated out over time and divided among the units as part of the rent calculation. Insurance costs are also passed along in the rent.
That's just part of it. A successful rental property owner considers every potential cost and does calculations.
Prevailing rental rates for similar properties is also part of the calculation. An empty apartment generates no revenues, so being competitive in pricing is crucial.
Some investment property owners will forgo some immediate profits if appreciation in value is likely and average rents are too low to take a profit at a given time.
But, if you rent a place to live, you're going to be paying the costs of ownership of your place, wether it is a single family home or a studio apartment. Property owners and landlords hate to lose money on their buildings. Your rent is how they avoid doing that.
The property taxes on my modest 3-bedroom single family home are about $2400 per year. If I were going to rent the place out, My calculations on what it would rent for would include $200 per month to cover that cost. the mortgage payment on that property is $600/month. I'd certainly add that, so the base rent would be $800 per month. Annual maintenance costs on the house are also known to me, and they'd be divided by 12 to come up with a monthly figure. Any other costs that are predictable also would be added.
So, guess what the average rents for houses like mine are in neighborhoods like mine. $1400-1600. All of the costs are in there.