Net Effective Rent Calculator
Calculate the true rental income considering discounts, allowances, and operating costs
Calculate Net Effective Rent
Term and Rent
Total: 12 months
Base rent per month
Discounts for Tenants
Months tenant pays no rent
One-time payment for tenant improvements
Additional Landlord Expenses
Monthly maintenance, security, cleaning costs
Net Effective Rent Results
Income Breakdown
Expense Breakdown
Formula used: NER = 12 × [BR × (Term - N) - TA - OC × Term] / Term
Net Income: $0 over 12 months
Effective Rate: NaN% of base rent
Rent Analysis
Example Calculation
Office Space Rental Example
Property: 80 sq m office space
Lease Term: 2 years (24 months)
Monthly Rent: $3,200
Rent-Free Months: 1 month
Cash Allowance: $4,000 for improvements
Operating Costs: 8% of rent = $256/month
Calculation Steps
1. Rent Income: $3,200 × (24-1) = $73,600
2. Operating Costs: $256 × 24 = $6,144
3. Total Deductions: $4,000 + $6,144 = $10,144
4. Net Income: $73,600 - $10,144 = $63,456
5. Annual NER: 12 × $63,456 ÷ 24 = $31,728
Monthly NER: $2,644 (82.6% of base rent)
NER Components
Base Rent
Monthly rental income
Rent-Free Periods
Months without rent collection
Cash Allowances
Tenant improvement costs
Operating Costs
Maintenance and management
Rental Tips
NER provides true rental profitability comparison
Include all tenant incentives and landlord costs
Compare NER across different lease proposals
Consider market conditions when setting terms
Understanding Net Effective Rent
What is Net Effective Rent?
Net Effective Rent (NER) is the actual rental income a landlord receives after accounting for all tenant incentives, concessions, and operating expenses. It provides a more accurate picture of rental profitability than the base rent alone.
Why Use NER?
- •Compare different lease proposals accurately
- •Understand true rental profitability
- •Make informed leasing decisions
- •Account for all costs and incentives
NER Formula
NER = 12 × [BR × (Term - N) - TA - OC × Term] / Term
- BR: Base rent per month
- Term: Lease term in months
- N: Number of rent-free months
- TA: Tenant cash allowance (total)
- OC: Operating costs per month
Key Insight: A higher base rent with many concessions may result in lower NER than a modest rent with fewer incentives.
Common Rental Incentives
Rent-Free Periods
First few months free, often used to attract tenants in competitive markets.
Tenant Allowances
Cash provided for improvements, build-outs, or moving expenses.
Reduced Deposits
Lower security deposits or waived fees to reduce tenant's upfront costs.