Setting a Fair Rent

When you are renting property you have to ensure that your rents are not unrealistic, and you are setting a  fair rent for your rental property.  This means you have to avoid setting a property rental which is either too high or too low!

Below you will find 8 factors you need to consider when setting a Fair Rent for your rental property:

Analyse how realistic the rent you are asking is  ..  How to achieve a Fair rental for your property  ..  Location  ..  Property Type  ..  Condition of Property  ..  If your property is still empty  ..  Annual Rent Reviews  ..  Would I live here?

(1) Analyse how realistic the rent you are asking is.

A good indicator as to how realistic your property rent is, is the number of enquiries you take about the property being advertised.

No enquiries means the property could be priced too high and then it becomes a waiting game.  You wait for the enquiries… your rental property is empty.. You have no rental income from the property… you still have costs to cover …. These costs have to come from another area of your finances… how long can you stand this situation?

To avoid being in a situation like above, you have to try and set your rental rate at a rate which is inline with the market place.

If you are taking a huge number of enquiries it may be that you have set the property rental at a figure below market rates.  Now you have an interesting scenario!

You have set your rental figure in line with your own financial calculations, and you have worked out that the rental figure you are charging will be sufficient. Suddenly you have a lot of enquiries!

You can pick and choose which tenant is most suitable, and you can log all the other enquiries for future contact when properties in your property rental portfolio become empty.

(2) How to achieve a Fair rental for your property

In order to get a fair property rental figure,  try the following tactics:

• Check your papers,
• Check shop windows,
• Check the internet
• Call local letting agents
• Look for similar properties to yours ….
• Look for the ones that are actually Let! This means people are paying the rent being asked for, for a particular property, and hopefully you will find the figures are in line with your own expectations.

(3) Location

Location is so important. When you buy your rental property you have to consider many factors before offering the purchase price you feel is realistic.

Proximity to shops, medical facilities, schools, colleges, universities,  airports,  bus and rail stations and parkland are just some factors to consider.

(4) Property Type

The type of property (flat or house) and the size of the property…i.e.  … 1 or 2 or 3 or 4 or more bedrooms is important and will help determine the level of rent to charge.

Once you have decided your budget for purchase you have to consider the following type of situation…..

Do I buy one 4 bedroom property and charge a fair rent for this property?

Of course when it is empty there will be 0%  rent,  therefore this must be built into my property rental calculations.

OR

Do I buy two 2 bedroom properties and charge a fair rent for each property?

This gives you a better chance of having at least 50% of your property rental income all the time,  and hopefully many occasions when both properties are filled giving you 100% of the rental income you are charging.

It is your decision

(5) Condition of Property

The condition of the property both inside and out is a very important factor in setting the rent for the property.  If the property has “tired decoration” it will not rent as easily.

When tenants move to a property an important deciding factor is what furnishings are in the property and in particular, fridges, freezers, cookers… etc

Is there a garage, is there a driveway and is there off street parking?

(6) If your property is still empty

If you are finding that the fair rent you have set for your property is not producing any enquiries you may have to consider changing your offer to perhaps any of the following:

Reduce the deposit you are asking for the property,  or even suggest no deposit

Lower your monthly fair rental figure to get the property filled

(7) Annual Rent Reviews

An important point to remember with regard to setting a fair rent for your rental property is the fact that as part of the lease you should have the condition inserted which will allow you to increase property rentals perhaps every year.

This gives you the chance to raise your rent each year to allow you to move closer to the figure you had hoped for.

(8) Would I live here?

Finally,  a very important factor behind setting a fair rental for your rental property,  is for you to visit the property yourself,  and ask yourself if you could live in the property.

The next 3 articles will cover the following major points for you to consider:

(a)  Your Cashflow

(b)  Calculating your Budget

(c) Find your Rental property

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