How to Calculate Rent for Your Rental Property
A practical framework for pricing your rental — comparable analysis, the 1% rule, vacancy considerations, and how to know when to raise rent.
By Marlo · June 11, 2026 · 8 min read
Pricing your rental correctly is one of the highest-leverage decisions you make as a landlord. Price too high and you sit vacant — every month of vacancy at $800/month is $800 you never recover. Price too low and you leave money on the table for years. Here is how to get it right.
The Two Costs of Wrong Pricing
Overpriced: Your unit sits vacant while the market passes you by. At a typical 7% vacancy rate a landlord with 5 units loses about 4 months of rent per year to vacancy. Overpricing extends that.
Underpriced: You collect less than market rate every single month. At $75 below market on a 2-year lease, you leave $1,800 on the table. Multiply by multiple units and it compounds quickly.
The goal is to price at market — high enough to maximize revenue, low enough to minimize vacancy.
Method 1 — Comparable Market Analysis
The most reliable pricing method. Find what similar units in your area are currently renting for and price accordingly.
What Makes a Good Comparable
- Same ZIP code or within 5 miles
- Same number of bedrooms
- Similar square footage (within 15%)
- Similar amenities (washer/dryer, garage, yard)
- Currently listed or rented within the last 90 days
Where to Find Comparables
- Zillow Rentals — largest database of active rental listings
- Apartments.com — strong in larger markets
- Facebook Marketplace — particularly useful in smaller markets like West Tennessee
- Craigslist — still active in many markets
- Drive the neighborhood — for-rent signs sometimes list prices
How to Adjust for Differences
When your unit differs from a comparable, adjust the price:
| Feature | Typical Adjustment |
|---|---|
| Washer/dryer included | +$50-100/month |
| Garage (1 car) | +$50-75/month |
| Central HVAC vs window units | +$50-75/month |
| Updated kitchen/bath | +$50-100/month |
| Pet-friendly vs no pets | +$25-50/month |
| Fenced yard | +$25-50/month |
These are rough guidelines — local markets vary. Use comparables to calibrate.
Method 2 — The 1% Rule
A quick sanity check used by rental investors: monthly rent should be approximately 1% of the property's value.
Example:
- Property value: $85,000
- 1% rule target: $850/month
In lower-cost markets like West Tennessee, the 1% rule often works well. In high-cost coastal markets, 1% is rarely achievable.
Use this as a benchmark, not a ceiling. If comparables support $950/month on an $85,000 property, charge $950. The 1% rule tells you whether a purchase makes financial sense as a rental — not necessarily what the market will bear.
Method 3 — HUD Fair Market Rents
The US Department of Housing and Urban Development publishes Fair Market Rents (FMRs) for every metro area and county in the country. These are updated annually and represent the 40th percentile of rents in each market.
How to use FMRs: FMRs are a floor, not a ceiling. If the FMR for a 2-bedroom in Obion County is $785/month, that's the lower end of what the market supports. Condition and amenities push the price up from there.
Find FMRs: huduser.gov/portal/datasets/fmr.html
Accounting for Vacancy
No unit is rented 12 months every year. Plan for vacancy:
National average vacancy rate: ~7%
What 7% vacancy means:
- A unit rented at $800/month
- 7% vacancy = 0.84 months vacant per year
- Annual loss: ~$672
When pricing a newly vacant unit factor in the cost of extended vacancy. A unit priced $75 above market that takes 45 days longer to rent than comparable units loses $1,200 in rent — more than the premium you'd have earned over a year.
The vacancy math:
Days of additional vacancy × daily rent > Months of premium rent earned
Price to minimize total vacancy — not to maximize monthly rate.
How to Know When to Raise Rent
At Lease Renewal
Review market comparables 60-90 days before renewal. If market rents have increased, consider a modest increase.
How much to increase:
- Below-market rent: Bring to market over 1-2 renewals (large jumps cause turnover)
- At-market rent: CPI increase (3-5%) is defensible and expected
- Above-market: May need to hold to retain a good tenant
The Cost of Turnover
Before raising rent, calculate the cost of losing the tenant:
| Cost | Estimate |
|---|---|
| Vacancy (1-2 months at $800) | $800–$1,600 |
| Cleaning and repairs | $500–$2,000 |
| Marketing costs | $0–$200 |
| Screening costs | $35–$75 |
| Total turnover cost | $1,335–$3,875 |
A $50/month rent increase over 12 months generates $600. If raising rent causes turnover, you've lost $1,335 or more to gain $600. Know your tenant before you raise.
The retention calculation:
Annual rent increase < Expected turnover cost = Hold or increase modestly Annual rent increase > Expected turnover cost = Increase to market
Pricing by Market Size
Small Markets (Under 50,000 population)
West Tennessee markets like Union City, Dyersburg, and Paris operate differently from Memphis or Nashville. Key differences:
- Fewer comparables — you may have 5-10 instead of 50
- Local knowledge matters more — talk to other landlords
- Vacancy can be higher during certain seasons
- Facebook Marketplace and local word-of-mouth drive more leads than Zillow
In small markets, price in $25 increments rather than trying to optimize to the dollar.
Large Markets (Memphis, Nashville)
More data available — use Zillow, Apartments.com, and CoStar (if you have access) to build a robust comparable set. Larger markets support more precise pricing.
The Rent Pricing Checklist
Before listing a unit:
- Pull 5-10 active comparables within 5 miles
- Adjust comparables for amenity differences
- Check HUD Fair Market Rent for your county
- Calculate the cost of 30-day vs 60-day vacancy
- Price at mid-market for fastest lease-up
- Set a price floor (minimum acceptable rent) before negotiating
AI-Assisted Rent Pricing
TameRent's AI advisor, Marlo, suggests rent prices based on comparable units in TameRent's database for your area — combined with HUD Fair Market Rent data when local comparables are limited. As more landlords use TameRent in your market, the recommendations get more precise.