Glossary

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Effective Rental Income
It is a common practice for homeowners and other property owners to rent portions of their property to make extra money. If you are a landlord, you need to know how to calculate your effective rental income to determine if a property is worth investing in. This calculation is easy to make: Simply determine how much money you could make in a given month. Then, you subtract any months that the property could be vacant as well as any money that you have to put into the property. For example, if a property could go for $1,000 a month or $12,000 a year, consider that this property is vacant at least three months a year and requires an average of $200 a month to maintain. You would then make $9,000 a year minus $2400 for repairs; therefore, your effective rental income would be roughly $550 a month.