Breaking Down One Dollar of Rent: 2023

Monthly rent payments are more than just a transaction between a resident and a rental housing provider. It's a pivotal contribution to the American economy, community growth and the backbone of the rental housing industry. Rent payments directly support 17.5 million jobs. They also finance local necessities like education and emergency services through property taxes.

The rental housing industry, which is predominantly made up of small mom-and-pop owners, operates on narrow profit margins. Imposing harmful public policies without understanding the economic intricacies can jeopardize the ability of rental housing providers to cover their expenses, which can lead to a reduction in housing quality and quantity. It is critical for policymakers to prioritize a comprehensive understanding of the rental housing intricacies and work towards collaborative solutions that foster a sustainable and prosperous housing market.

The National Apartment Association has released an updated version of the previous Dollar of Rent analysis, utilizing new data derived from the operating statements of federally mortgaged properties. This explanatory infographic breaks down a dollar of rent using national averages into its component parts. 

The Breakdown of Every Rent Dollar

Mortgage Payments: $0.46

A significant portion (46 cents) goes directly to cover the property's mortgage, ensuring the property remains available for residents.

Operating Expenses: $0.27

From utilities to insurance and ongoing maintenance, 27 cents cover the essential operating expenses that keep properties safe, functional and well-maintained.

Property Taxes: $0.11

Eleven cents of every dollar of rent go towards taxes, which finance community programs such as schools, emergency services, parks and other local services.

Employee Payroll: $0.07

Payroll for community staff, from property managers to maintenance teams, collectively accounts for 7 cents of every dollar of rent. Their hard work and dedication are what keeps every community thriving.

Capital Expenditures Reserves:  $0.02

For future upgrades and significant repairs, owners allocate 2 cents to capital expenditures reserves. By doing this, they are future-proofing their communities and ensuring quality housing for their residents.

Profit: $0.07

There is a common misconception that rental housing providers enjoy large profit margins. In reality, only 7 cents of every dollar are returned as profit to owners. This slim margin underscores the challenging financial pressures that the rental housing industry faces. 

View the Infographic

 

Click below to discover where a dollar of rent goes at the state level.