“How much will my property rent for?”, “What is it worth?” “Should I increase the weekly rent? and if so, by how much?”
These are questions that we hear and provide appraisals and advice on every day.
How much will my property rent for? Supply and demand determines the achievable rent of a property. When the demand of tenants is high and there are limited properties for rent, the weekly rent achievable can increase. The best way to determine the rent is by conducting a Comparative Market Analysis (CMA) on what other similar properties are renting for in the area. This research can be undertaken by looking at public rent websites.
What is my property worth? Once again, this is determined by supply and demand of the buyer and how emotionally attached they become to a property. The best way to determine the sale price is by conducting a CMA on properties sold in the area, rather than the sale price. It is easy for an agent to list a property for sale at any price. But, is it going to sell?
If you are selling your property and want a quick sale an unrealistic price can cost you additional interest and lose potential genuine buyers.
If you are renting your property an unrealistic rent can lead to long-term vacancy periods that can have a greater financial loss to you than the extra $40 per week over-priced requested increase.
So beware of the price trap. As an investor we always recommend that you do your own research in addition to the CMA information that we provide.
Should I increase the weekly rent? and if so, by how much? Our agency recommends regular rent increases (at least one per annum) as it becomes an expectation of the tenant and avoids high increases if one has not been implemented for some time in accordance with the market. However, if they have been exceptional long-term tenants and the rent increase could result in the tenants having to leave, it may be a consideration to weigh the pros and cons of having secure tenants in comparison to possible vacancy periods and additional advertising costs.
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