How much should you charge for rent? A landlord's pricing method

Rent pricing is the single decision that moves your return the most, and most landlords make it the least carefully — they take last year's number, add a bit, and hope. Here is a method that takes about an hour and holds up.

Start with comparable rents, not with your costs

Your mortgage payment is not evidence of what a unit is worth. The market sets rent; your costs only tell you whether the deal works. Pull five to ten active listings within roughly a mile that match on bedrooms, bathrooms, square footage, parking, and laundry. Active listings tell you what people are asking today; a unit that has sat for six weeks is asking too much.

Then adjust honestly. Newer appliances, in-unit laundry, off-street parking and central air push you above the middle of that range. Dated kitchens, a walk-up third floor, no parking and street noise push you below. Write the adjustments down — the discipline is in being specific rather than optimistic.

Sanity-check with the 1% rule, then ignore it

The 1% rule says monthly rent should be around 1% of the purchase price. In a lot of the country in 2026, almost nothing hits that, and in the cheapest markets plenty of bad properties clear it easily. Use it as a smell test on a purchase, not as a pricing input on a unit you already own. The market rent is the market rent whether or not you overpaid.

Do the vacancy math before you chase the last $50

Say the honest market range is $1,750–$1,850 and you list at $1,900. If that costs you three extra weeks of vacancy, you gave up roughly $1,300 in rent to gain $600 over the year. You lost money and added a month of showings.

The reverse is also true: pricing $75 under market to fill fast is cheap if it buys you a strong applicant pool, because the real cost of a rental is not vacancy — it is a bad tenant. One eviction costs more than a year of the discount.

Raising rent on a renewal

A good tenant who pays on time is worth a discount to market, and most landlords know that and then quietly let it grow to $300 a month over five years. A practical middle: raise to somewhere near market at each renewal, give plenty of notice, and say plainly that you are staying below the going rate because you would rather keep them. Check your state and city rules first — notice periods and increase caps vary, and rent-stabilized units have their own rules entirely.

Before the conversation, know your numbers: what this unit actually nets after the mortgage, taxes, insurance and repairs. If you do not track that, start with the free rental property spreadsheet — the annual summary tab tells you which unit is carrying you and which one you have been subsidizing.

What to do with the number once you pick it

Put it in writing, in the lease, with the due date, the grace period and the late fee your state allows. Then track rent due against rent collected every month rather than at tax time. Pricing is a decision you make once a year; collection is the part that actually determines what lands in your account.