Confused about setting the right rental price?

Being a landlord is tough, especially if you’re new to the game, and setting a fair rent on your investment property sits high on the list of challenges.

The tricky part about rental prices is that there are two con icting forces at play: having a price that is affordable and re ects value for tenants, but still high enough to earn a profit.

Get the price right and the property should be rented in a timely manner; get it wrong and it can sit vacant for weeks if, not months, pricing yourself out of the market.

So how do you decide on a suitable rental amount?

Study the market. What are the median rental prices in the area? Check newspapers, google resources like realestate.com.au, domain.com.au and local real estate agents.

Use rental reports. These are valuable tools showing rental pricing trends, how much a rental property was listed for, how long it sat on the market and the nal renting price. Rent reports are available through your property manager or online.

Know your property. The type of property, layout, number of bedrooms and bathrooms, outdoor spaces if any, parking, appliances, views, proximity to amenities and transport, and the condition of the property will all factor into the price you can set.

Look at the competition. Compare your property with those of a similar size and features in the neighbourhood to gauge the going rate.

Liveability. Next, consider how your property is different from others. Does it offer a better view, have more space, recently been renovated or is a new construction? If your place is better or worse than the competition, you’ll need to adjust your price accordingly. Don’t let emotion cloud judgement – if your property doesn’t have the location or amenities to back up the higher price tag, prospective tenants will move on to another property.

Your costs. Consider your monthly costs like maintenance and repairs, mortgage payments and insurance. Factor in infrequent expenses like property management and unplanned expenses like emergency repairs.

Vacancy tolerance. Vacancies can be pro tability killers. You may need to price the property to move.

Adjust the rent. Setting a price for a rental is not a one-time event. The housing market shifts almost constantly and you should anticipate fluctuations in your pricing in line with market demand. Rule of thumb: when rental seekers outnumber properties available you can charge a higher rent; when there is an oversupply of properties, you may have to lower the rent to attract tenants.

Everyone has a different goal when owning property. But the right rent should, at a minimum, be enough to cover all of your expenses for the property; and maybe to pocket a percentage of rent each month as a pro t.

When all the calculations are done, a competitive price will attract people to see your property.

If you would like some guidance on setting rents, please give our Property Manager a call today on 4441 6033.