From this construction video tutorial, we can gather knowledge on how to make the valuation of monthly rent concerning a building that has been developed on a land.
There are two types of rents like net rent and gross rent. Net rent does not include taxes associated with land or construction. Gross rent normally includes these types of taxes.
As for example, here, the value of plot is taken as 4,00,000 rupees (inclusive of all taxes).
The value of structure is taken as 4,70,000
As per government law, 5% of land value and 6% of construction value can be taken as return in one year.
Based on the above figure, the monthly rent of the building should be determined.
Therefore, the annual rent should be as follow :-
4,00,000 x 5% = 20,000/Rupees
Annual rent of structure = 4,70,000 x 6% = 28,200/Rupees
So, total annual rent will be = 28,200 + 20,000 = 48,200/Rupees
Therefore, monthly annual rent will be = 48,200/12 = 4017/Rupees
Now, if you want to find out the time period when total investment for land and structure will be recovered, apply the following formula :-
4,00,000 + 4,70,000 = 8,70,000/4017 = 216.58 months
To covert the value to year
216.58/12 = 18 years.
To get more information, watch the following video.