(http://www.rentmyestate.com.au/how-to-set-the-price-for-your-rental-property/) - One of the most important aspects of renting out your property is determining the value of your property. When you're trying to advertise your property to attract your most ideal tenants, setting the correct price for your property is paramount. In my experience as a licensed Real Estate Agent, I have witnessed a lot of property owners get into trouble by setting the rent too high and start to attract poor tenants which results in loss of rent as well as increasing the chances of damage to your property. So when you set your rental price, try not to think about what you want, but what your target market is willing to pay. Place yourself in the shoes of your prospective tenants and consider the practical amount that you would be happy to pay for your particular property.

1. Tenant Management
How to Set Your Rental Price for your Property
Compare with similar properties in the market
Today, I’m going to give you the steps on what a real estate agent
and what I’ve done in the past to value a rental property. So first of
all, it’s not what I, or not what the property owner, or you think the
house is worth, it’s about what your tenants or prospective tenants
are happy to pay or prepared to pay for your property. So what we
need to do here is we need to look at what your property is, the
attributes of your property, and various other details and features
compared to the other ones that are currently in the market. Because
at the end of the day, it’s going to boil down to tenants walking from
one house in the market for rent to your property, and they’re going
to go for one that’s got the best value and most suitable for them. So
you need to put yourself in their shoes, you need to jump on… you
should jump on realestate.com.au and compare your property with
other similar properties.

2. Tenant Management
How to Set Your Rental Price for your Property
Evaluate property features and price
So first of all, the attributes of your property: Number of bedrooms, bathrooms, and car spaces. Number of bedrooms is the most
important, so you should search on there for the same amount of your house… if your property has three bedrooms, you should
search for other properties in your area in the same suburb with three bedrooms. With regards to location, it should be in the same
location. What I mean by that is it should be within a 5k radius. If it’s in the same street, the better, ’cause it will be more
comparable to your property.
Ok, so what we need to do now is we’ve narrowed it down, we’ve got about hopefully four or five properties that are similar to your
property with regards to the number of bedrooms, bathrooms and car spaces. Now we need to narrow it down again and look
further into the detail of the house. It might be how new the kitchen is, how new the bathroom is, how big the property is, what sort
of condition the property is in? Is it new or old? These are the features that the tenants are going to consider. Also, how close is it to
the amenities, transport, shopping centers and so forth?
So once we’ve narrowed it down again, you should have, hopefully, two or three properties. And if they’re sitting at, between $360
and $380, then your property obviously sits around that mark. Just a warning here, you should try and find at least two
comparables. The reason being that if you’re only comparing your property off one other property, the rent that they’re asking for
that property could actually be too high or too low. So that you’re not set correctly in the first place. So you want to get more than
just one particular comparable.
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3. Tenant Management
How to Set Your Rental Price for your Property
Fair and reasonable rental price
Just a couple of quick notes with regards to exactly what price you want to set your rental property at, after you have got your
comparables. If you go too high, you’re more likely to find someone who’s a little more desperate. Someone who’s willing to pay
more money for your property because they can’t get anything else. But whereas if you go too low, well, you’re not getting as
much income, are you? So you want to go and set your price at a fair and reasonable, you know, sits in the actual market place
at that particular time. Don’t compare it off other properties that rented out a year ago because a year’s a long time in rentals.
So the other thing you need to consider is the time frame that you’ve got. The time that you need tenants in your property. So
for instance, if you got six weeks from now until when you need to find tenants, well, you may decide to take a little bit of a risk
and set your property.. your rental price slightly higher than the other ones or just on the higher side. But just, please, a word of
warning: if you do go into this track, I can’t stress this enough, make sure that within the first week, and I mean within the first
week, you need to reduce that price if you’re not getting necessary inquiries. And what I mean with necessary inquiries, it might
mean if you’ve got less than five inquiries in that whole week, I would definitely reduce the price and maybe change some
photos around.
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4. Tenant Management
How to Set Your Rental Price for your Property
Setting the right rental price
If you do go too low, if you set your rental price too low, then you’re
obviously not doing enough justice to your property and you’re
getting less income. So to finish off, just a couple of words here. You
should be reasonable, you should be realistic about your property
and honest to yourself, because if you’re not honest about what your
property is, and the condition of it and the attributes, bedrooms,
bathrooms compared to other properties that are currently in the
market for rent, then you’re going to end up having your property
vacant for (a) longer (period), which means you lose money. So I
hope you learned anything out of this and if you’ve got any other
further questions, you can contact us
at tenantmanagement.com.au and I hope to speak to you next time!
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