How much rent should you charge?
How to determine what rent you should charge
With rental prices rising, you may be wondering whether you’re still charging the right amount and if you should raise the rent at your next lease renewal or rent review.
While the Adelaide rental market has experienced significant growth in the last 12 months, opting for a large rent increase without doing your research can be risky.
Firstly, if your tenants are coming to the end of their fixed-term agreement, offering them a new agreement with an above-market increase could prompt them to look for another property. Secondly, it may take longer to find a great replacement tenant if your property becomes vacant. Like many things in property pricing, getting the balance right is key. Try to find the balance between increasing the rent and trying to retain good tenants, this is to reduce any vacancy periods and your reletting costs. Keep reading to understand how to decide what you should charge.
Focus on the market to make your own estimate
Strong rental price growth is great for investors, but it can be stressful for tenants. Hiking your rent price too much can cause great tenants to find another property. To get an idea of how much you can reasonably charge for rent, list everything your property has to offer. This includes the number of bedrooms, locations, bathrooms, car spaces, and other amenities such as separate laundry, air conditioning, and outdoor space.
From here, look at the location. What does the area offer to potential tenants? Think about cafes, walkability, local schools, and proximity to the CBD and other employment hubs. After considering local amenities, use property search websites to compare similar properties in the area. With all your property details and research gathered you should be able to estimate what you can charge.
Talk to your property manager
Your property manager works closely with the market each day, so they know exactly how much properties are renting for and what you may be able to charge in the current market. If you’ve worked through the steps above to come to your estimate, talking to a trusted professional to make sure it’s accurate is critical. They’ll be able to guide you on the exact price to charge to secure a great new tenant or keep the great tenants currently living at your property.
It can be tempting to make significant increases to weekly rent in a tight rental market. While this can put more money in your pocket, making the wrong decision about what to charge can prompt your current tenants to move out and then deter great tenants from viewing and applying for your property. Before you decide to change how much rent you charge, do your research, and talk to your property manager, who can help you make sure what you’re charging is fair. Not only will this reduce your risk of vacancy, but it will ensure you get the best long-term returns.
Remember, this article is general in nature and is not financial or legal advice. Please consult your professional financial and legal advisors before making any decisions for yourself.