How much should you charge for rent? Whatever comparable units nearby are actually renting for, adjusted for the ways yours differs from them. Your own costs do not enter into it.
That answer sounds glib, so it is worth being precise about why the obvious alternative fails. Everything below is about units rented on long-term leases.
How much should I charge for rent?
Start with the rents being asked and achieved on units near yours with the same number of bedrooms, take the middle of that set rather than the bottom, then adjust once for each way your unit genuinely differs.
The reason it cannot start with your costs is that the tenant is not buying your mortgage. They are choosing between your unit and the four others they have open in another tab, and none of those listings mention what the owner paid. A rent set from the inside out lands wherever your purchase price and financing happen to put it, which has no particular relationship to what anyone will pay.
That does not make your costs irrelevant. It makes them the answer to a different question. Market rent tells you what the unit earns. Your costs tell you whether that is enough. Running the two together is how a landlord ends up either advertising above the market and eating a month of vacancy, or quietly under-earning for years because the number that covered the bills in 2021 still covers them today. It is also why rent is not the same thing as profit — the top line and the outcome move for different reasons.
Asking rent, market rent, achieved rent: which number you want
Three terms get used interchangeably here and they are not the same thing.
Asking rent is what a listing advertises. It is the easiest number to find and the least reliable, because it includes every landlord who guessed high and has not yet come down.
Achieved rent is what a unit actually rented for. It is much better evidence and much harder to see, since listings usually disappear rather than announcing their final price.
Market rent is the figure you are trying to estimate: what your unit would rent for, in reasonable time, in current conditions.
The practical consequence is a weighting rule. A comparable that leased three weeks ago at a known figure is worth more than three that have been asking for six weeks with no takers. A listing that has sat unleased for two months is not evidence of the market — it is evidence that one landlord priced above it.
What makes a rental truly comparable?
In rough order of how much it matters:
- Bedroom count. This is the first filter and it is close to non-negotiable. A household renting a three-bedroom needs three bedrooms, and it will not take a large two-bedroom instead at a discount.
- Distance. Closer is better, and it beats similarity. A three-bedroom half a mile away that you adjust for a missing bathroom is better evidence than an exact match eight miles out, because eight miles is often a different market.
- Travel, not just distance. Two houses a quarter of a mile apart with a limited-access highway between them do not compete for the same tenant. If getting from one to the other means a ten-minute drive, treat them as farther apart than the map says.
- Bathrooms, then size, then condition, then amenities — parking, in-unit laundry, outdoor space, air conditioning.
- Construction type, where it applies. A manufactured home rents in its own market, and stick-built comparables will overstate it. If the home sits on a leased lot, the lot rent is a separate charge on the tenant and the rent for the home has to account for that.
Size deserves a warning, because it is where the arithmetic tempts you into a mistake. Dollars per square foot is easy to calculate and it does not scale the way it appears to. A three-bedroom of 2,800 square feet is not worth twice a three-bedroom of 1,400 square feet — realistically it is worth something roughly ten percent more, because the household rented three bedrooms and got some extra floor area with them. Cutting fifteen or twenty percent off a same-bedroom comparable purely because it is larger is one of the most reliable routes to a rent that is too low.
A worked example: pricing a three-bedroom
The subject is a three-bedroom, two-bathroom single-family house of about 1,400 square feet, in good condition, with off-street parking and in-unit laundry. All figures here are illustrative and internally consistent, chosen to show the method rather than to describe any real market.
Six comparable listings within a mile and a half:
| Comp | Distance (mi) | Beds | Baths | Size (sq ft) | Rent | $/sq ft | Status |
|---|---|---|---|---|---|---|---|
| Comp 1 | 0.3 | 3 | 2 | 1,380 | $2,050 | 1.49 | Active |
| Comp 2 | 0.5 | 3 | 2 | 1,520 | $2,195 | 1.44 | Active |
| Comp 3 | 0.7 | 3 | 1.5 | 1,300 | $1,925 | 1.48 | Active |
| Comp 4 | 0.9 | 3 | 2 | 1,450 | $2,100 | 1.45 | Active |
| Comp 5 | 1.2 | 4 | 2 | 1,760 | $2,350 | 1.34 | Active |
| Comp 6 | 1.4 | 3 | 2 | 1,390 | $1,850 | 1.33 | Leased 2 months ago |
Comp 5 comes out of the set first. It has four bedrooms, so it tells you about a different product. That leaves five same-bedroom comparables:
| Category | Rent |
|---|---|
| Comp 6 (leased) | 1,850 |
| Comp 3 | 1,925 |
| Comp 1 | 2,050 |
| Comp 4 | 2,100 |
| Comp 2 | 2,195 |
The middle of that set is $2,050. That is the starting point, and the adjustments run from there:
- Size: at 1,400 square feet the subject sits mid-pack. No adjustment.
- Bathrooms: Comp 3 is the cheapest active listing and it is half a bathroom short. The subject belongs above it rather than beside it.
- Amenities: in-unit laundry matches Comps 1 and 4 and beats Comp 3. Worth a small step up, not a large one.
- The achieved figure: Comp 6 leased at $1,850 two months ago. That is the only number here that someone actually signed, and it sets a floor. It does not become the target simply because it is real, since it is also the lowest and two months stale.
That gives a defensible range of $2,000 to $2,175, and $2,100 as the single figure to advertise. A range is what the evidence supports; a listing needs one number.
Note what the dollars-per-square-foot route would have produced. The median across those five is $1.45, which applied to 1,400 square feet gives about $2,030 — below the bedroom-parity answer, and it would have been much further below if the set had contained a comparable of a very different size. The per-foot figure is a useful sanity check and a poor derivation.
A free template for working out how much rent to charge
The worksheet below has the same columns as the table above, plus a notes column, so you can run the method on your own unit without building a spreadsheet first.
Nine columns: comp, distance, beds, baths, size, rent, dollars per square foot, listing status and notes. Three worked rows are filled in from the example above, with blank rows underneath and a subject row at the bottom for your own unit.
Opens in Excel, Numbers or Google Sheets. Fill in every comparable you find, sort by rent, and read the middle of the same-bedroom rows.
Two habits make it more useful than the file itself. Record the listing status and the date for every row, because a stale asking price and a recent signed lease are different kinds of evidence. And keep the rows you rejected, with a note saying why — next year you will not remember whether you dismissed a listing because it was four bedrooms or because it was across a highway.
How much rent should I charge if my costs went up?
The same as before your costs went up, unless the market moved too.
This is the hardest version of the rule to accept, because a tax reassessment or an insurance renewal is a real event with a real number attached, and it feels like it ought to flow through. It does not flow through, for the plain reason that no prospective tenant is aware it happened. Every other landlord in the area faces the same insurance market, so if the cost increase is general it will show up in their asking rents in due course, and you will see it in your comparables. If it is specific to your property, it is yours.
What a cost increase genuinely changes is the decision underneath the rent. If the unit no longer covers its costs at market, that is a financing, insurance or purchase-price question, and knowing it early is worth more than a rent rise that produces a vacancy. Pricing above the market to close the gap is the one response that reliably makes it worse.
Where do landlords most often get the rent number wrong?
Four failure modes account for most of it, and three of them push the rent down.
Anchoring on the cheapest comparable. This is the big one, and it is invisible from the inside because the lowest listing always feels like the safe, realistic choice. If your final number sits at or just above the cheapest thing you found, you did not derive it. Take the middle of the same-bedroom set and adjust from there.
Scaling on floor area. Covered above. Same-bedroom comparables of different sizes are much closer in rent than dollars per square foot implies.
Adjusting twice for one thing. A manufactured home already rents below stick-built. If you have found manufactured comparables, use them as they are. Applying the construction discount to a comparable that already reflects it charges for the same difference twice.
Letting your current rent anchor the answer. If a unit has been rented at $1,600 for four years, every estimate you make will drift toward $1,600, because that is the number in your head. The whole point of the exercise is to test that figure, so derive the market number from the comparables first and compare afterwards.
There is one more, and it is a cost rather than an error of arithmetic. Underpricing does not only cost you the difference in rent — an underpriced unit also tends to sit empty longer, which is the opposite of what most landlords expect when they price low to rent quickly.
If you would rather not assemble the comparables by hand, you can run a market rent analysis on your own unit and get the comparable set, the travel times, the local market data and the derivation in a report. It is free while we are in beta.
How much should I charge for rent on a voucher tenancy?
Start from the same market figure, then work with the local housing authority's payment standard rather than substituting it.
The number people reach for here is HUD's Fair Market Rent, and it is worth understanding what it is before using it. It is set around the fortieth percentile of the local market and it is a gross figure, meaning it includes utilities the tenant pays, where a lease you sign is usually a contract rent with the tenant paying their own. Convert before comparing, or you are comparing two different things.
It is also published on a lag. In a stable market most units rent above it, which is what makes it a useful reference point. In an area where rents have softened since the survey it can sit above what units are currently renting for — so a market estimate that lands below it is not an error in itself. Check it against your comparables: if the comparable listings are also below the published figure, they are the better evidence, because they are current and it is not. There is more on what Fair Market Rent is actually measuring.
The payment standard is a separate matter again. The local public housing authority sets it between ninety and a hundred and ten percent of Fair Market Rent, and then deducts a utility allowance, so the figure that matters for a specific tenancy is not the published number. Ask the authority directly.
What this comes down to
The rent is a fact about your local market, and it is discoverable. Comparable units with the same bedroom count, weighted toward the ones that recently leased, adjusted once for each real difference, read from the middle rather than the bottom.
The number you get is worth having twice over. It tells you what to advertise, and the gap between it and what you currently charge tells you what a lease renewal is actually worth. Most landlords find that gap larger than they expected, in one direction or the other.