Rent Multiplier and Depreciation Period: Evaluation Tool for Real Estate Investments

The value of housing or real estate is determined by the benefits it offers to its users. This benefit varies depending on the intended use and location. The rent multiplier reflects an important relationship between the benefits offered by the property and its value. Rent and price refer to values related to the time dimension of use.

Benefit and Rent Multiplier:

The real estate market rental rate quantifies the subjective benefits of the occupants of the property by expressing them in monetary terms. This method expects the rental multipliers of different houses in the same location and quality of construction to be close to each other. The rental multiplier is an important tool in assessing the investment potential and return of a property.

Rent multiplier calculation:

If you have an apartment worth 3.500.000 TL and you rent it out for 17.500 TL, we can say that the depreciation period is 200 months. In this case, the rent multiplier can be used to understand the relationship between the rental income and the value of the investment. The rent multiplier is an important measure of how long it takes for an investment to pay for itself.

Residential valuation and the rental multiplier are critical elements for understanding the performance of real estate investments. Utility determines the value provided to the user and this value becomes measurable through the rental rate in the market. By using the rental multiplier, investors can assess the potential of their investments and make more informed decisions.

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