(http://www.rentmyestate.com.au/how-to-set-the-price-for-your-rental-property/) - One of the most important aspects of renting out your property is determining the value of your property. When you're trying to advertise your property to attract your most ideal tenants, setting the correct price for your property is paramount. In my experience as a licensed Real Estate Agent, I have witnessed a lot of property owners get into trouble by setting the rent too high and start to attract poor tenants which results in loss of rent as well as increasing the chances of damage to your property. So when you set your rental price, try not to think about what you want, but what your target market is willing to pay. Place yourself in the shoes of your prospective tenants and consider the practical amount that you would be happy to pay for your particular property.
Tenant Management How to Set Your Rental Price for your PropertyCompare with similar properties in the marketToday, I’m going to give you the steps on what a real estate agentand what I’ve done in the past to value a rental property. So first ofall, it’s not what I, or not what the property owner, or you think thehouse is worth, it’s about what your tenants or prospective tenantsare happy to pay or prepared to pay for your property. So what weneed to do here is we need to look at what your property is, theattributes of your property, and various other details and featurescompared to the other ones that are currently in the market. Becauseat the end of the day, it’s going to boil down to tenants walking fromone house in the market for rent to your property, and they’re goingto go for one that’s got the best value and most suitable for them. Soyou need to put yourself in their shoes, you need to jump on… youshould jump on realestate.com.au and compare your property withother similar properties.
Tenant Management How to Set Your Rental Price for your PropertyEvaluate property features and priceSo first of all, the attributes of your property: Number of bedrooms, bathrooms, and car spaces. Number of bedrooms is the mostimportant, so you should search on there for the same amount of your house… if your property has three bedrooms, you shouldsearch for other properties in your area in the same suburb with three bedrooms. With regards to location, it should be in the samelocation. What I mean by that is it should be within a 5k radius. If it’s in the same street, the better, ’cause it will be morecomparable to your property.Ok, so what we need to do now is we’ve narrowed it down, we’ve got about hopefully four or five properties that are similar to yourproperty with regards to the number of bedrooms, bathrooms and car spaces. Now we need to narrow it down again and lookfurther into the detail of the house. It might be how new the kitchen is, how new the bathroom is, how big the property is, what sortof condition the property is in? Is it new or old? These are the features that the tenants are going to consider. Also, how close is it tothe amenities, transport, shopping centers and so forth?So once we’ve narrowed it down again, you should have, hopefully, two or three properties. And if they’re sitting at, between $360and $380, then your property obviously sits around that mark. Just a warning here, you should try and find at least twocomparables. The reason being that if you’re only comparing your property off one other property, the rent that they’re asking forthat property could actually be too high or too low. So that you’re not set correctly in the first place. So you want to get more thanjust one particular comparable. 2 of 4
Tenant Management How to Set Your Rental Price for your PropertyFair and reasonable rental priceJust a couple of quick notes with regards to exactly what price you want to set your rental property at, after you have got yourcomparables. If you go too high, you’re more likely to find someone who’s a little more desperate. Someone who’s willing to paymore money for your property because they can’t get anything else. But whereas if you go too low, well, you’re not getting asmuch income, are you? So you want to go and set your price at a fair and reasonable, you know, sits in the actual market placeat that particular time. Don’t compare it off other properties that rented out a year ago because a year’s a long time in rentals.So the other thing you need to consider is the time frame that you’ve got. The time that you need tenants in your property. Sofor instance, if you got six weeks from now until when you need to find tenants, well, you may decide to take a little bit of a riskand set your property.. your rental price slightly higher than the other ones or just on the higher side. But just, please, a word ofwarning: if you do go into this track, I can’t stress this enough, make sure that within the first week, and I mean within the firstweek, you need to reduce that price if you’re not getting necessary inquiries. And what I mean with necessary inquiries, it mightmean if you’ve got less than five inquiries in that whole week, I would definitely reduce the price and maybe change somephotos around. 3 of 4
Tenant Management How to Set Your Rental Price for your PropertySetting the right rental priceIf you do go too low, if you set your rental price too low, then you’reobviously not doing enough justice to your property and you’regetting less income. So to finish off, just a couple of words here. Youshould be reasonable, you should be realistic about your propertyand honest to yourself, because if you’re not honest about what yourproperty is, and the condition of it and the attributes, bedrooms,bathrooms compared to other properties that are currently in themarket for rent, then you’re going to end up having your propertyvacant for (a) longer (period), which means you lose money. So Ihope you learned anything out of this and if you’ve got any otherfurther questions, you can contact usat tenantmanagement.com.au and I hope to speak to you next time! 4 of 4