Calculating rent is an extremely important part of being a property investor as charging too much or too little can have a damaging effect on your rental return.
Listed below are a few ideas for how you can calculate your rent accurately:
Current rental market
There is no better place to get a ball park figure of what you should be charging than the current rental market. However, you need to remember to focus on suburbs that are near your property as this will give you a more accurate idea. Keep an eye on population statistics, median rent, median property prices as well as vacancy rates. This will give you an idea for the demand of rental properties in your area, which could affect the rent amount. You can get a free property report on our website which will give you some statistics for a suburb by clicking on this link.
Speak to an expert
Experienced property managers can be very valuable as they would know a lot about the current market and what renters are looking for. Information they have about the local market could also be more up to date and relevant than statistics you find online.
They may be able to give you advice about what changes and improvements you can make to your property to attract tenants and what improvements will result in you being able to charge more rent.
Investigate nearby properties
This is a great way to get a firsthand look at what features other properties have and then you can compare it with your own property. There may be certain things that are better or worse, which can help you scale your rent amount.
Be careful with rent increases
Rental increases can be a delicate subject for tenants, so as a landlord you need to be cautious if you are considering raising the rent. Firstly, you need to ensure that it is still a similar amount to other comparable properties in the areas. If the rent is significantly higher, it may result in more vacant periods.
Secondly, if you do raise the rent, it is important to provide the tenant with adequate notice. Make sure you check your state’s laws around tenant’s rights.
Finally, rent increases should be done in moderation. Even if you haven’t raised the rent in a number of years, increasing it by over $50 a week could upset your tenants. Small, gradual increases of $5 or $10 will be less extreme.