How much rent should I charge? A pricing guide for small landlords

The right rent is what similar places near yours are actually renting for, adjusted for what makes yours better or worse. Not what you need to cover the mortgage, and not what one listing is asking. Set it too high and the place sits empty; set it too low and you leave money on the table for the whole lease. Here is a simple way for a small landlord to land on a number, with the free tools to check it.

Step 1: find real comparables

A comparable ("comp") is a rental close to yours with the same number of bedrooms and bathrooms, a similar size and a similar condition. Aim for five to ten, as close as you can find, rented or listed within the last few months.

Where to look:

• Listing sites: Zillow, Apartments.com, Realtor.com and similar sites. Filter to your area and unit type.
• Local listings: Facebook Marketplace, Craigslist and local groups, where many small landlords list.
• Rent estimate tools: Rentometer and the rent estimates on Zillow give a quick range for an address. Treat them as a starting point, not the answer.
• Local property managers and agents: they see what actually rents, not just what is asked, and many will give you a range for free.

Pay most attention to places that rented quickly. A listing that has sat for six weeks is telling you its price is too high.

Step 2: adjust for differences

No comp is identical. Adjust up or down for the things renters in your area pay more for:

• In-unit laundry, a garage or off-street parking, a yard
• Updated kitchen and bathrooms, central air
• Pets allowed (and whether you charge pet rent)
• Utilities included, which renters compare carefully
• School district, commute and walkability

Write down each comp's rent and what is different about yours. You will usually end up with a fairly narrow range.

Step 3: check it against public benchmarks

Two free, official sources help you sanity-check the range:

• HUD Fair Market Rents. HUD publishes Fair Market Rents each year for every metro area and county, by bedroom count. They are used for the Housing Choice Voucher program, so they are especially useful if you might rent to a voucher holder. See our guide to Section 8 rent for landlords.
• Census data. The Census Bureau's American Community Survey reports median gross rent by area. It lags the market, so it is a floor check, not a price.

Step 4: price for the vacancy, not the dream

The most expensive rent is no rent. One empty month costs one twelfth of a year's income, about 8.3 percent. On a $1,500 unit, holding out for $1,600 and sitting vacant for an extra month costs $1,500, which the extra $100 a month takes 15 months to win back.

A practical approach: list near the middle of your range, watch how many inquiries and showings you get in the first week or two, and adjust. A flood of inquiries means you may be low. Silence means you are high.

Rules of thumb, and their limits

• The "1 percent rule" (monthly rent around 1 percent of the purchase price) is an investor's screening shortcut for deciding whether to buy. It says nothing about what the market will pay for your unit.
• Your costs (mortgage, taxes, insurance) tell you whether the rental makes sense for you. Renters do not care about them, so they cannot set the price.
• Income ratios. Many landlords look for household income of about three times the rent. That is a common screening convention, not a law, and some states and cities limit how income can be used, especially for voucher holders.

Check the local rules first

A few places limit what you can charge or how much you can raise rent. Oregon and California have statewide limits on annual increases for many units, and some cities have their own rent control or stabilization rules. Notice periods for increases also vary by state; see rent increase notice rules by state.

Once you have a tenant

Revisit the rent at each renewal using the same comps method. Small, regular increases in line with the market are usually easier on everyone than a big jump after several flat years, and keeping a good tenant is almost always cheaper than turnover.

When the rent is set, make it easy to pay. RentMerchant creates and emails each month's invoice on its own, tenants pay by bank transfer or card, and late fees and reminders run on the terms you set. The Free plan covers up to three properties; create a free landlord account. New to this? Start with the first-time landlord checklist.