Assessing the market rental value of your property is simple in theory, but complex in practise.
Market rent price.
The answer is this. “Compare recently achieved rents for comparable apartments, and adjust those amounts up or down for variations to your apartment”.
If only it was that simple… the theory vs the practise seperate very quickly as there are a number of catches.
How to work out market rent.
- To acurately adjust for variations between a relatively comparable apartment and your apartment, you must first physically inspect all of those comparable apartments which is not possible.
- The market can move quickly (up or down) and often the market rent is ahead of historic evidence. So how much adjustment should be made? Hard to know.
- Final agreed rents are not made public (like sale prices) so the proported “leased rent” is often the asking rent, and is not necessarily the final rent that was agreed.
Like all property valuations, some subjective judgement is required, and so not everyone will agree.
(Remember the question of assessing the market rent is different to the question of “how to maximise the rental income?” which is discussed in detail here.)
How is market rent determined?
Here are a list of things that renters really value in an apartment and what they will pay a premium for, as well as things that reduces the market rent.
Location Rent Value
This goes without saying, especially if it is easy walking distance to things like retail strip, train / trams, parks or the beach.
Apartment size matters
Size does matter. But it is also about the configuration, and how usable the space is between bedrooms and living areas. Some apartments have a tiny living area.
Rent price for Outdoors
A courtyard or large balcony is sought after and adds a lot to the market rent. Especially ground floor lawned areas that suit pets.
The Kitchen layout impacts the Rent Price
A return, or island kitchen bench can double as a dining table with stools, saving valuable space. They also work really well as a casual bench, for breakfast or a pre-dinner drink. Conversely, galley style kitchens are less favourable.
Good Cabinetry design ads Rental Value
It may seem like a little thing, but a well-designed wardrobe or kitchen cabinet (and laundry for that matter), can put a smile on a renters face.
Orientation Rent Value
North, South, East or West. The way an apartment and its outdoor area faces, makes a big difference. East gets beautiful morning sun while the west can get hot. North is perhaps the best while south facing can be a bit dark and cool through the winter months.
Finishes imact the Rent Price
Old or stained carpet and scuffed walls turn people off immediately. Timber floors in the living rooms are a favourite. Modern and well-appointed kitchens and bathrooms are also crowd pleasers.
How the Building impacts the Market Rent
The facilities in a building such as a pool, gym or roof top BBQ area, definitely add value (hopefully they are well maintained and good quality). Similarly, the general feel, style and size of the overall building is also big driver in renters’ decision making. We all want a comfortable peaceful home with respectful neighbours.
What price the View?
An apartment on level 50 with a commanding view over water or the CBD could rent for almost double the exact same apartment on level 1, looking into an adjoining building.
Market rent price summary
As you can see, it can be complex. Understanding each of these variables and how much they add or detract in rental value requires an experience professional. The very best way to find out the rental value of your apartment is to find a great apartment agent like Wood Property and ask them. They are the ones who undertand the impact of each atribute is and have most likely inspected many similar apartments and know how the market is moving.