Compute net effective rent after free months and concessions.
Please do not make financial decisions based on these results.
What is the Net Effective Rent Calculator?
Compute net effective rent after free months and concessions. To use the Net Effective Rent Calculator, enter monthly face rent, lease term, free months, other concessions; it returns net effective monthly rent, total concessions, concession as % of lease, and shows them instantly as you type.
Measuring a rental property
Rental investors compare properties with a few standard ratios. Net operating income (NOI) is rent minus operating costs, before the mortgage. The cap rate divides NOI by price. Cash-on-cash return divides yearly cash flow by the cash you actually invested. Each answers a different question, so use more than one.
- Cap rate. Return on the price, ignoring financing. See the cap rate calculator.
- NOI. Income after operating costs. See the NOI calculator.
- Cash-on-cash. Return on your own cash. See the cash-on-cash calculator.
- Gross rent multiplier. A quick price-to-rent screen. See the GRM calculator.
Costs that are easy to forget
Vacancy, repairs, property management, insurance, property tax and capital replacements (roof, furnace) reduce the rent you actually keep. Use conservative figures for each and test a bad year, not only a good one. The rental property calculator puts the whole picture in one place.
Rent from the tenant’s side
Landlords often ask for income of about three times the rent; check it with the 3x rent calculator. For moves, partial months and increases, use the prorated rent calculator and the rent increase calculator.
How to use the Net Effective Rent Calculator
- Fill in the fields. You will need Monthly face rent ($), Lease term (months), Free months, Other concessions ($). Use figures from a lender quote or your tax bill where you have them, and keep the term and rate realistic. Fields marked optional can stay at zero.
- Read the result. The highlighted box gives the Net effective monthly rent, and the cards below show Total concessions, Concession as % of lease. Tables and charts break it down further.
- Test other scenarios. Results update as you type. Change one value at a time to see what drives the answer, and press Reset to go back to the defaults.
Formula and how it works
Example with real numbers
Here is the Net Effective Rent Calculator using the default values shown in the calculator above:
Inputs
| Monthly face rent ($) | 2,600 |
|---|---|
| Lease term (months) | 12 |
| Free months | 1 |
| Other concessions ($) | 0 |
Results
| Net effective monthly rent | $2,383.33 |
|---|---|
| Total concessions | $2,600.00 |
| Concession as % of lease | 8.33% |
With these inputs the calculator returns Net effective monthly rent: $2,383.33. Change any value in the calculator to see how the result moves.
What if you change one input?
Sensitivity check: raising Monthly face rent ($) from 2,600 to 3,120 (about 20% higher) and leaving everything else as in the example above changes the results like this:
| Result | Example | After the change | Change |
|---|---|---|---|
| Net effective monthly rent | $2,383.33 | $2,860.00 | +20% |
| Total concessions | $2,600.00 | $3,120.00 | +20% |
| Concession as % of lease | 8.33% | 8.33% | 0% |
The input that moves the result most is the one to check twice. Change it in the calculator above to test your own case.
What the results tell you
The results panel of the Net Effective Rent Calculator reports Net effective monthly rent, total concessions and concession as % of lease. Compare these figures while changing one input at a time, and use the related calculators below to look at the same situation from another angle.
Method and limits. This calculator applies the formula in the section above to your inputs, in your browser; nothing you enter is stored on our servers. The result is only as accurate as the numbers you enter and the formula shown above. It is for information, not financial, tax or legal advice.
Frequently asked questions
Why is net effective rent lower than face rent?
Free rent and allowances reduce what the tenant actually pays on average.
How much house can I afford?
A common rule is to keep housing costs under about 28% of gross income and total debt under 36%. The House Affordability Calculator applies those limits to your numbers.
What is included in a monthly mortgage payment?
Principal and interest, plus property tax, homeowners insurance, PMI if your down payment is under 20%, and HOA fees if they apply.
Are the results guaranteed?
No. Results depend entirely on the numbers you enter and the formulas shown on this page. Please do not make financial decisions based on them alone; confirm important figures with a licensed professional.
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