How Much Rent Should I Charge?
You should charge an amount of rent based on your expenses and the rental market. The rental market is influenced by property features and property location. Rental market trends vary over time, so staying up to date with market trends is essential.
What is your property’s value?
A rule of thumb is that your property’s value can be a helpful guide for your rental price. Rent is often charged at approximately 1% of the property’s value. So if you have a property worth $400 000, then $400 in weekly rent is considered appropriate. The current market value can differ from the original price when your property was bought. Online resources can help estimate your property’s value. This is a helpful starting point for deciding on a rental price. However, the rental market is ever-changing, and it can take nuance to find the balance between maximising the rent you charge and keeping the right tenants. A good property management company can use their industry knowledge and minimise stress.
How much do similar properties charge?
You need to estimate rent based on properties with similar features in similar locations. Size factors like square metres, bedroom count, car space and bathroom count are the most common and obvious influences on rent. Desirable property features like swimming pools, air conditioning and garages also add to the rent. Newer and well-maintained properties are most desirable. Furnishings influence rental rates – a furnished property can charge more. It also risks putting off potential tenants who have their own furniture. The type of property is an important factor. If you are renting out an apartment, you must compare it with how much rent other apartments are charging.
How much do properties in your area charge?
Different areas have different median rental prices. You can research online to determine the rent by suburb. This is typically tied to the desirability of an area. Within a suburb, there can be desirable features that raise a property’s rent if they are close by. The beach, shopping centres and eateries can make suburbs more desirable. Similarly, negative features like factories and airports lower rent. It’s important to look at trends regarding rental rates in a suburb. If rental prices are trending upwards, you could possibly charge higher rent. If they are trending downwards, then prioritise locking down a tenant with fixed rent over a longer period.
If you’re unsure what category your property falls into. Get in touch with the RMA team, who can help.
How to increase rental value
You can increase the rental value of your property by renovating or adding appealing features. For example, improving your property’s aesthetics by giving a fresh coat of paint to the walls or renovating the old tiling in your property’s kitchen or bathroom will increase your property’s rental value. Dedicated areas of your property can be set up for storage or parking. You can revamp the backyard by adding an outdoor entertainment area or garden. Many of these changes can be implemented for a low cost and provide a high return.
What to avoid when setting rent
The things to avoid when setting rent are:
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Setting the rent too low and making the property less financially beneficial.
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Setting the rent too high and struggling to find a tenant.
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Failing to maintain high property conditions or not fixing issues.
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Failing to adjust to the continuously changing rental market.
Research and forethinking are critical to getting the most from your rental!
Consult a rental expert
Generating the greatest financial return from your rental property can be complex. There are numerous factors that need to be considered, and ultimately, you’ve bought an investment property for financial benefits.
Here at RMA, we have years of experience helping landlords get the most from their properties. We’ve been trusted with over $4-5 billion worth of real estate! Have a chat with your nearest RMA office to find out how much you should be charging in rent.