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How much rent should I ask for my property?

How much rent should I ask for my property?

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A property investment owner wants to optimise the return, meaning generating the maximum rent, but also minimising costs. Importantly getting the highest possible rent is not just about the dollars per month.

We often get asked… What rent should I ask? What are the leasing costs? How long does it take to find a new tenant?

Ideally an owner wants a high rent with minimum renter turnover. Each time a renter changes it creates leasing and marketing costs, as well as lost rental income.

Here are the 6 points to consider when setting the asking rent.

  1. Don’t be afraid to set a stretch rent and gauge the market feedback. The rent can always be adjusted down in a week or so if there are no applications, but don’t completely overshoot the market.
  2. Maximise the property’s presentation online and physically, with great photos and maybe furniture (or virtual furniture photos). Ensure the apartment presents well with fresh paint and fittings and all maintenance taken care of. At each inspection it is important to have the lights on, balcony doors open, heating or cooling on, and everything sparkling clean.
  3. Sometimes renters with a poor rental history will apply for a highly priced apartment that’s receiving little attention. They hope to take advantage of the lack in applications, but they may become problematic payers.
  4. If the rental market is moving quickly (up, or down), recent comparable rents may not be a good indication of the market rent. A market leading strategy may be required in setting the asking rent. The asking rent for comparable properties, do not necessarily reflect the market rent, as it is not an amount an owner and renter have agreed upon.
  5. When an apartment is first advertised online, an email is automatically sent from realestate.com.au or domain.com.au to matching potential renters who have registered for updates. If the asking rent too high, the property alert will not be sent to best target group of potential renters. Later, if the rent is adjusted down, the email notification is not resent, so that important part of direct marketing is lost.
  6. Two or three weeks of lost rent is sometimes more than the difference in the rental adjustment. Keep the bigger picture in mind to avoid too many weeks of no rent. If the apartment is looking good, has great marketing with professional photos but is still not attracting attention, the asking rent must be too high, so adjust it down until you meet the market.

The highest returning property is the one that has the same tenant for many years with no leasing fees, advertising, or lost rental periods between tenants. So set the rent at a reasonable but market level to ensure renter longevity which maximises the long-term return.

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Apartments Made Easy

Written by a 4th generation real estate agent Apartments Made Easy gives you the tools and tells you all you need to know about how to buy, sell, own, lease, and manage your apartment successfully.

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