How to Calculate Rent Escalations

Whether you are renting an apartment or leasing commercial space, you may hear the words "$1,000 per month, with 3 percent escalations per year." Use this simple formula to calculate rent escalations. Then apply it to every day life, like calculating a restaurant tip.

Instructions

Difficulty: Easy

Things You’ll Need:

• Calculator

1. If you are escalating by 3 percent, take the base rental rate and multiply by 1.03.
2. If you are escalating by 3 percent for more than one year, take the total from the first escalation, then multiply by 1.03 again.
3. Repeat Step 2 for every year you escalate the rent.

Tips & Warnings

• Use the same method to calculate any escalations. For example, if you are at a restauarant, and you want to leave a 20 percent tip, take the total amount on the bill, and multiply by 1.20.