There are many factors that influence the rent you can charge for your investment property. Set the rent too low and you’ll miss out on valuable profits, but set it too high and you might struggle to find a tenant.
Your property manager will be able to advise you on the best rent level to set for your local property market, but here are seven factors that influence rent to get you started…
It’s an old real estate cliché, but location counts when it comes to setting rent. Properties located close to public transport, schools and major employers such as hospitals and universities tend to attract higher rents.
Views come with a price tag. If your investment property overlooks a park, features water views or presents an elevated outlook over a suburb, you should be able to charge a premium.
Properties that have been recently renovated obviously demand higher rents. But don’t go renovating your investment property without a plan. Talk to your property manager about the features that are in most demand in your market.
Don’t fall into the trap of automatically setting the rent of your two-bedroom apartment at the same level as other two-bedroom apartments in your area. Consider the square footage of your property and whether it’s larger than similar properties.
Including major appliances like dishwashers, washing machines and dryers, and fridges should be reflected in the rent you charge. The same goes for stainless steel appliances in the kitchen and luxury appointments in the bathroom.
- Length of lease
As a general rule, longer-term leases will attract higher rents as they offer greater stability to tenants. If you’re only offering a six-month lease, you may need to discount your rent accordingly.
- Market demand
Your local market will largely dictate the rent you can charge. Talk to your property manager about which sort of properties are in the highest demand in your area. For example, studio apartments might be sought-after in city areas, but will fall flat in the suburbs.