The Rental Price is Right
Landlords should understand the rental climate when determining the most suitable price to charge
for rent. Supply and demand drive the rental market, therefore, price adjustments need to be made
to accommodate.
Here are a few of my tips to consider when working out the right price to charge for your investment
property.
1 - A comparison is key to determining the right rental price. Consider what your property offers in terms
of size, presentation, and proximity to transport, shops and schools. A comparison can then be made
to other properties in your area. Extensive research will be a guiding factor in making the right
decision about price.
2 - High vacancy rates in an area may indicate low levels of demand or a high supply level. Remember
that in some areas, certain kinds of homes may be more desirable to tenants. For example, people
might be looking for townhouses to rent in a particular area over standalone homes. If the kind of
property that you are offering is in oversupply, you may have to consider lowering your asking price
in order to attract a desirable tenant.
3 - Where vacancy rates are low, the opportunity may exist for a price increase. In more exclusive areas
renters may be more willing to pay a higher price than average to secure a property. Rental
increases may not be the best decision when your property is happily occupied. Maintaining a good
relationship with tenants may encourage continued occupancy. Even a simple gesture such as
mowing the lawns can influence the satisfaction of your tenants. If you choose to do the mowing
yourself, it may even afford you the chance to check in on the property. If the rent is increased in a
competitive market, you run the risk that the tenant will leave, resulting in a vacant investment
property.
The financial loss from this can quickly outweigh any gain from a high rent from the next
tenant.