How to use the room rental income calculator
- Enter the monthly rent for the room.
- Enter the share of the year you expect the room to be empty, and the extra utilities and other costs the room adds each month. The starting values are examples.
- In More options, add a one-time setup cost, such as furniture or a lock, to see how long it takes to pay back.
- Read the net per month and per year. A net below zero shows in parentheses.
Formula
rent collected per year = rent x 12 x (100 - vacancy) / 100
net per year = rent collected - (utilities + other costs) x 12
net per month = rent collected per month - utilities - other costs
Costs are counted all year, even while the room is empty. Money is rounded half up to the cent. The payback is the setup cost divided by the net per month.
$850 room with 5% vacancy
At $850 a month with the room empty 5% of the year, rent collected is $850 x 12 x 95 / 100 = $9,690.00, which averages $807.50 a month. The room adds $60 of utilities and $25 of other costs, which is $85 a month, or $1,020.00 a year. The net is $9,690.00 - $1,020.00 = $8,670.00 a year, or $722.50 a month.
Costs equal 1.2 months of rent over the year, since $1,020.00 / $850 = 1.2. A $600 setup cost pays back in $600 / $722.50 = 0.8 months. If rent were $100 with 10% vacancy and $120 of monthly costs, the net would be ($30.00) a month, shown in parentheses.
What counts as a cost
Count only costs the tenant causes. If the house already has internet, the extra cost is zero. If the room adds a second person to the water bill, the extra might be the difference in your bill before and after. A few months of past bills usually give a fair estimate. Other costs can include cleaning supplies, small repairs, an insurance change and the wear a person adds to shared spaces.
Include a vacancy allowance even if you expect a long stay. People move, rooms need cleaning between tenants, and it can take weeks to find the next one. Five percent is only an example, and you can set zero if the room is already rented on a fixed lease.
Beyond the monthly figure
Income from renting a room may be taxable, and rules about renting rooms differ by place and by lease. Your mortgage, your landlord, your insurer or a homeowners association may have rules too. None of that is modeled here, so check them before you rent. The result is the money side of one decision, not a complete analysis.
To split shared costs among everyone in a home, use the Rent Split Calculator. To compare a whole property, see the Rental Property Calculator, and for nightly stays the Short-Term Rental Calculator.
Assumptions and limits
- Rent, utilities, other costs and setup are in dollars and cents, with no more than two decimals.
- Vacancy is a percent of the year from 0 to 100. The monthly costs continue while the room is empty.
- Rent stays the same all year. Increases, deposits, late payments and taxes are not modeled.
- Nothing is stored or uploaded.
Frequently asked questions
How much can I make renting a room?
It depends on the local rent and your costs. Enter the rent you expect, a vacancy allowance and the extra costs the room adds, and the page shows the net per month and per year, with any setup cost repaid over time.
What vacancy rate should I use?
Use your own estimate, because it depends on how long tenants stay and how fast you can fill the room. The 5% in the example is a starting point. If the room is rented for a fixed term with no gap, you can set it to zero.
Should utilities be split or counted in full?
Count only the extra cost the tenant adds to your bills. If you include utilities in the rent, enter that extra amount as a cost. If the tenant pays a share directly, leave it out of both rent and costs.
How is the payback calculated?
The one-time setup cost is divided by the net per month. If the net is zero or below, the page says the setup is not repaid at that rate, since further months would not bring the money back.