Rent to Cost Ratio Calculator

✖Monthly Rental Income refers to the amount of money received from leasing out a property on a monthly basis.ⓘ Monthly Rental Income [MRI]			+10% -10%
✖Property Value refers to the estimated monetary worth of a real estate asset or property at a given point in time.ⓘ Property Value [PV]			+10% -10%

✖Rent to Cost Ratio is the percentage relationship between a property's annual rental income and its total acquisition or construction cost.ⓘ Rent to Cost Ratio [RCR]

⎘ Copy

👎

Formula

✖

Rent to Cost Ratio

Formula

`"RCR" = "MRI"/"PV"`

Example

`"0.009961"="4165"/"418120"`

Calculator

LaTeX

Reset

👍

Download Financial Formula PDF PDF Image

Rent to Cost Ratio Solution

STEP 0: Pre-Calculation Summary

Formula Used

Rent to Cost Ratio = Monthly Rental Income/Property Value
RCR = MRI/PV
This formula uses 3 Variables

Variables Used

Rent to Cost Ratio - Rent to Cost Ratio is the percentage relationship between a property's annual rental income and its total acquisition or construction cost.
Monthly Rental Income - Monthly Rental Income refers to the amount of money received from leasing out a property on a monthly basis.
Property Value - Property Value refers to the estimated monetary worth of a real estate asset or property at a given point in time.

STEP 1: Convert Input(s) to Base Unit

Monthly Rental Income: 4165 --> No Conversion Required
Property Value: 418120 --> No Conversion Required

STEP 2: Evaluate Formula

Substituting Input Values in Formula

RCR = MRI/PV --> 4165/418120

Evaluating ... ...

RCR = 0.00996125514206448

STEP 3: Convert Result to Output's Unit

0.00996125514206448 --> No Conversion Required

FINAL ANSWER

0.00996125514206448 ≈ 0.009961 <-- Rent to Cost Ratio

(Calculation completed in 00.004 seconds)

You are here -

Home » Financial » Mortgage and Real Estate » Rent to Cost Ratio

Credits

Created by Keerthika Bathula

Indian Institute of Technology, Indian School of mines, Dhanbad (IIT ISM Dhanbad), Dhanbad

Keerthika Bathula has created this Calculator and 50+ more calculators!

Verified by Aashna

IGNOU (IGNOU), India

Aashna has verified this Calculator and 25+ more calculators!

< 20 Mortgage and Real Estate Calculators

Long Term Capital Gain

Go Long Term Capital Gain = Final Sale Price-Indexed Cost of Acquisition-Indexed Cost of Improvement-Cost of Transfer

Short Term Capital Gain

Go Short Term Capital Gain = Final Sale Price-Cost of Acquisition-Home Improvement Cost-Cost of Transfer

Effective Gross Income

Go Effective Gross Income = Potential Gross Rental Income+Other Income-Allowances for Vacancies and Bad Debts

Net Rental Yield

Go Net Rental Yield = ((Annual Rental Income-Annual Expenses)*(1/Property Value))*100

Cost Approach Appraisal

Go Property Value = Reproduction Cost-Depreciation+Value of Land

Gross Potential Rent

Go Gross Potential Rent = Number of Units Available for Rent*Annualised Market Rent

Qualifying Ratio

Go Debt to Income Ratio = (Total Monthly Debt Payments/Gross Monthly Income)*100

Vacancy Rate

Go Vacancy Rate = (Vacant Units in the Building*100)/Total Units in the Building

Equity Build up Rate

Go Equity Build Up Rate = Year One Equity Build Up/Year Capital Expenses

Gross Income Multiplier

Go Gross Income Multiplier = Property Sale Price/Effective Gross Income

Gross Rental Income

Go Potential Gross Rental Income = Property Value/Gross Rent Multiplier

Cash on Cash Return

Go Cash on Cash Return = (Net Operating Income/Total Cash Invested)*100

Net Operating Income

Go Net Operating Income = Total Property Revenue-Operating Expenses

Gross Rental Yield

Go Gross Rental Yield = (Annual Rental Income/Property Value)*100

Down-Payment Amount

Go Down Payment Amount = Final Sale Price*Percentage Payment

Rent to Cost Ratio

Go Rent to Cost Ratio = Monthly Rental Income/Property Value

Assessed Value

Go Assessed Value = Assessment Market*Market Value

Property Tax Rate

Go Property Tax Rate = Assessed Value*Mill Rate

Annual Rental Income

Go Annual Rental Income = Monthly Rental Income*12

1 Percent Rule

Go Minimum Monthly Rent = 0.01*Purchase Price

Rent to Cost Ratio Formula

Rent to Cost Ratio = Monthly Rental Income/Property Value
RCR = MRI/PV

What is Rent to Cost Ratio ?

The Rent to Cost Ratio in real estate is a critical metric used by investors to gauge the income-generating potential and profitability of a property relative to its acquisition or construction cost. It is calculated by dividing the property's annual rental income by its total cost, typically expressed as a percentage. A higher rent to cost ratio indicates a more lucrative investment, as it signifies that the property generates a higher rental income relative to its initial investment. Investors often use this ratio to compare different investment opportunities and make informed decisions about property acquisitions based on potential cash flow and return on investment. However, while a favorable rent to cost ratio is indicative of a sound investment, it's essential to consider other factors such as operating expenses, market conditions, and financing terms to assess the overall financial viability and risk of the investment.

How to Calculate Rent to Cost Ratio?

Rent to Cost Ratio calculator uses Rent to Cost Ratio = Monthly Rental Income/Property Value to calculate the Rent to Cost Ratio, The Rent to Cost Ratio is the relationship between a property's rental income and its total acquisition or construction cost. Rent to Cost Ratio is denoted by RCR symbol.

How to calculate Rent to Cost Ratio using this online calculator? To use this online calculator for Rent to Cost Ratio, enter Monthly Rental Income (MRI) & Property Value (PV) and hit the calculate button. Here is how the Rent to Cost Ratio calculation can be explained with given input values -> 0.009961 = 4165/418120.

FAQ

What is Rent to Cost Ratio?

The Rent to Cost Ratio is the relationship between a property's rental income and its total acquisition or construction cost and is represented as RCR = MRI/PV or Rent to Cost Ratio = Monthly Rental Income/Property Value. Monthly Rental Income refers to the amount of money received from leasing out a property on a monthly basis & Property Value refers to the estimated monetary worth of a real estate asset or property at a given point in time.

How to calculate Rent to Cost Ratio?

The Rent to Cost Ratio is the relationship between a property's rental income and its total acquisition or construction cost is calculated using Rent to Cost Ratio = Monthly Rental Income/Property Value. To calculate Rent to Cost Ratio, you need Monthly Rental Income (MRI) & Property Value (PV). With our tool, you need to enter the respective value for Monthly Rental Income & Property Value and hit the calculate button. You can also select the units (if any) for Input(s) and the Output as well.

Home

FREE PDFs

🔍 Search