3 Ways to Discover How Much Rent to Charge
Deciding how much rent you’ll charge is one of the most important parts of managing your rental property. If you charge too little, you could be leaving money on the table. In contrast, charging too much can result in your property remaining vacant while others in the market are snapped up quickly. Fortunately, there is a sweet spot with rental prices, and there are a few things you can look at to make sure you get it right.
Understand your market
Firstly, just like property sales, rental prices are market driven. You may think you have a particularly great property, but it still needs to be priced appropriately for the market. Tenants are looking for the best value possible within their budget, so make sure you understand your market before deciding on a price.
Look at similar properties
Visit some common real estate sites such as realestate.com.au and domain.com.au to see what similar properties in your area are renting for and how long they are listed. You’ll want to find three types of properties: properties that aren’t quite as good, better properties, and similar properties. Finding properties that aren’t as good will show you where the lower end of your pricing should be. In contrast, looking at better properties will show you the price you shouldn’t exceed. Once you’ve worked out the lower and upper limits, view similar properties to find a price that’s just right.
List your property and test the market
Once you list your property, you’ll know if potential tenants see value in it by the amount of enquiry it receives. If you don’t want to schedule an open home straight away, you could list the property and have your property manager report back on how much enquiry they received. If they get lots of calls and emails in the days following the property going live, it’s likely that you’ve priced your place just right, and you may have a few decent applications. In contrast, if your property manager doesn’t receive much enquiry in the first week or two after the property is listed, it may be a sign that you need to lower the price to secure a tenant.
Picking your rental price may feel like one big guessing game, but with the right information and advice, you can ensure your property is listed at a price that provides value so that it can be leased quickly. Your property manager, who has experienced listing and leasing many properties, is a great source of information and advice when it comes to deciding on your rental price.
If there’s a big discrepancy between what you want to charge and your property manager’s suggestion, take the time to understand the factors impacting their decision. Listing your property now at a reasonable price will get your property leased far quicker than asking for too much and ending up with a vacant property.
Remember, this article does not constitute financial or legal advice. Please consult your professional financial and legal advisors before making any decisions for yourself.