# Equation to calculate required rent

Discussion in 'Information Resources & Tools' started by devank, 2nd Sep, 2015.

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1. ### devankLook, lets just get on with this, ok?Premium Member

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A friend asked me to give her a simple equation to see if a potential IP will cost her considering deprecation.
So... here we go. I used a bit of higher school algebra to come up with the answer.

So roughly, the rent needs to be \$(12 * Property Price - 100* Depreciation)/10,000 per week to have break-even cash-flow.

I thought it might interest few here as well.

Hanison, neK and D.T. like this.
2. ### D.T.Specialist Property ManagerBusiness Member

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Who said we'd never use maths again after we completed school

So, assuming depreciation is 0 (old properties), formula simply becomes 0.0012 * purchase price.

So in the example of one of mine 0.0012 x 147,000 = \$176 to break even, which is good because it rents for \$255

3. ### devankLook, lets just get on with this, ok?Premium Member

Joined:
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Posts:
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Inner West - Sydney
I guess the question is... Are the assumptions still valid for those old properties?

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