How to Calculate Rental Value?

I was planning to purchase a 1 BHK unit but before that I wanted to know about the rental value of the property. To know about that I contacted my financial advisor and asked him how to estimate rental value of a property. He provided me with an estimation rate that is pretty similar to the answer provided above. Since everything seems to be in my favour, I have decided to invest in this property. 

My uncle bought a 1BHK house for 45 Lakhs a few weeks back for the sole purpose of renting it out. He called me and asked about how to calculate rent of a property. Since I have been working in the property business for a while, I knew exactly how to calculate the rental value of a property. This is what I told him.

How to Calculate the Rental Value Of A Property?

The annual rental returns of a property should be somewhere between the range between 2.5% and 3.5% of its market value. I shared an example with him, let me put it down for you here: 

Let’s assume that the rental yield is 2.5%, then the yearly rental value would be:

Rs. 45 Lakhs X 2.5/100 = Rs 1,12,500/ year.

Now, the monthly rental value would be = Rs 1,12,500/ 12 (1 Year = 12 months).

= Rs. 9,375

If the rental yield is 3.5%, then the yearly rental value would be

Rs. 45 Lakhs X 3.5/100 = Rs 1,57,500/ year.

Now, the monthly rental value would be = Rs 1,57,500/ 12 

= Rs 13,125. 

So, the rental yield should be somewhere between Rs 9,375 and Rs 13,125. It is wise to check the rental rates in the locality of the property. 

This is all you need to know about how to estimate rental value. It’s a straightforward calculation, hope this helps.

Hi,

To calculate the rental value of your property you can use the

to find out how much rent are others charging for similar properties in your locality. This will give you an estimated rental value of your property. 

You can also divide the rental cost by the total area in square feet to get the rental cost per square foot. For instance, the property is 1100 square feet and the rent is 10,000 Rs. The formula 10000/1100 = 9.10 INR can be used to get the rental fee per square foot. 

Calculate the rental value of your property by applying the per sq. ft. rental value from the previous equation.

I hope this helps:)

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