Are you an investor or thinking about getting into the game? Understanding how much your investment, or potential investment, can yield in rent is an important step in your investment journey.
Our expert property management team have been successfully managing Western Australian properties for nearly two decades, so you could say we know a thing or two about ensuring your investment property is well cared for!
We discuss how you can maximise your rental yield below.
First things first, how can you price your rental yield accurately?
Setting the correct rental price is paramount to achieving the best result. It is important to strike the right balance between the number of enquiries - or ‘interest’ - and price. This will determine the ‘rental market value’*.
As a rule of thumb, rental applications will only be made if the asking price is within 5% of the rental market value.
Our expert property management team can quickly help determine what your potential rental market value will be, to help you understand your rental yield.
*Rental market value should not be confused with the property’s market value. It is how much rent you can expect to receive from the property.
How can you determine the maximum rental price for your property?
Our expert property management team always strive to get you the maximum rent possible. However, it is important to set the correct market rent to get your property rental as soon as possible.
To do this, we consider the following factors:
a) Demand: Is there a high or low demand for rental properties, currently? This will be determined by several factors.
b) Rental stock availability: We look at properties currently available for rent and consider their location and features for comparison to calculate the maximum, reasonable rent for your property.
c) Current rental stock: We compare your property with others we have currently have rented. We consider property location and features and compare it to your investment.
What if you want a higher rental amount?
Of course, at the end of the day, you have the right to set your rental price at whichever price you wish!
However, it is important to keep in mind that it is the market demand that sets the rent and if the market (i.e. the prospective tenants searching for a property) deem the asking rental price too high, your property may sit vacant longer than necessary.
And a vacant property will reduce your annual rental return by 2%, for each week it is without a tenant – ouch!
Is the rent reviewed during the time we manage it?
When we need to secure you a new tenant, we will always review the rent against market conditions. This will also be done at lease renewal time or whenever required. We will always contact you for permission before rent is altered.
For more information on our property management services, get in touch with your nearest Peard Real Estate office.