There are all sorts of issues that can arise when you set your rents incorrectly. Here are five tips for making sure you’re hitting the right numbers.

What happens when you set your rents too high?

Potential tenants may love the look of your property. But they’re going to take one look at the price and move on. Why would they rent from you when they can get something similar for less money?

Of course, it’s also possible to set your rents too low. This often happens because investors take a “set and forget” stance with their rents. Or, their property managers aren’t raising their rents appropriately on their behalf.

Wealth for Life rental rate
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That’s what happened to Stephen Clancy

Stephen Clancy bought two investment properties in 2014. He hired a property manager to take care of them and trusted the manager to serve his best interests.

That didn’t happen.

His property manager didn’t raise either property’s rent once in three years. This is despite the fact that the market grew during that time.

Stephen had enough. He came to Wealth for Life to find a new property manager.

Our team took on the case and immediately put a plan in action. Stephen’s new property manager spoke to all of his tenants. In the end, Stephen increased his rents by $45 for each property without losing a tenant.

That amounted to an annual income increase of $4,680.

As you can see, you can go too high or too low. In both cases, you’re costing yourself money. Going too high means your property sits vacant for long periods of time. Going too low means you’re not getting as much as you should from tenants.

You want to get it right to maximise your returns from your portfolio. Here are five tips that will help.

Tip #1 – Find the Right Property Manager

Stephen’s story shows just how much damage a bad property manager can do. He missed out on thousands of dollars due to his manager’s laziness.

Wealth for Life Property Manager
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It’s a problem that affects thousands of landlords in Australia. You trust a property manager to know what’s right for you. However, they avoid raising rents because they don’t want to handle the paperwork or they’re scared of losing tenants.

In the end, you’re losing out.

It’s important to conduct thorough research when looking for a property manager. Check that they have a track record of working with properties like yours. And take the time to quiz them on their processes. Ask what they do when they need to increase rents. If they don’t have a defined process, this may indicate that they don’t pay as much attention to rents as they should.

Also, be wary of any property managers that fail to communicate in a timely manner. They’re usually less likely to keep you up-to-date with market changes.

The point is that you can trust a good property manager to set rents on your behalf. The key is to make sure you find a manager who’s up to the task.

However, you may want to handle the task yourself. If that’s the case, the rest of these tips will help you.

Tip #2 – Check Similar Properties in Your Location

The odds are that there are several investors in your location. That usually means there are a few properties available for rent at any one time.

Wealth for Life compare properties
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The adverts for these properties can be a good source of information when you’re setting your rents.

Look for properties that offer similar features and locational benefits to your own. Compare your rents to whatever the other landlords are asking for. It’s also worth speaking to the property’s real estate agent to find out if it’s the standard rent for the market.

You may find that you’ve fallen behind the rest of the market this way.

Of course, you also have to be wary of overpriced properties. If you’ve seen the same property advertised several times over the last few months, its landlord may want too much money. If that’s the case, they’re not providing a good indication of how you should set your own rent.

Tip #3 – Consider the Property’s Desirability and Local Amenities

What does your property have to offer to a tenant?

It’s an important question to ask from a marketing perspective. You’ll use the information to make your property stand out when you’re advertising it.

Wealth for Life amenities
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However, it’s also an important question to ask when setting your rents.

For example, let’s say that you have a unit that has a balcony. That’s a desirable feature that someone may be willing to pay an extra $10 or $20 per week for.

Or, you may have a family home that’s close to several good schools. In this case, the location allows you to command more rent than if the schools were further away.

You also have the standard things, such as square meterage and storage space, to consider. The more you can offer of each, the more desirable your property becomes.

Revisit how much you charge if your property has great features but isn’t earning enough. You’ll often find that tenants will pay a little extra to retain easy access to features and amenities.

And of course, the opposite holds true if you can’t offer access to those things. In this case, you may have to charge a little less than some others in the market.

Tip #4 – Consider Your Expenses

In most cases, you want your property to have a positive cash flow. This means that its income is high enough to cover all expenses and give you a little profit.

Wealth for Life your expenses
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The only time this isn’t the case is when you’re following a negative gearing strategy. This is something that’s only suitable for experienced investors. Plus, there’s a lot of turmoil surrounding negative gearing in 2019. If Labor wins the election, it may become a less viable strategy.

So, you want to go for positive cash flow. And that means your expenses will play a part in determining how much rent you charge.

It’s crucial that you calculate your expenses before buying your property. You need to know how much you’re paying for your home loan. Plus, you have to account for maintenance and all of the other expenses that come along with being a landlord.

The rent you set has to cover all of those expenses.

If it can’t do that without making the property unappealing to the market, you may need to look elsewhere. If you’re in a good location and still struggling to maintain positive cash flow, you may need to raise your rents.

Tip #5 – React to the Market

How potential tenants react to your property can also influence your decision.

For example, you may find that you’re not getting any requests for viewings. If that’s the case, the property may have too high a rent attached to it.

Alternatively, you might get a lot of viewings but nobody expresses an interest. In this case, there’s likely something that you’re missing. Lowering the rent might be a solution here. But if you can identify the issue, you may be able to do something about it.

If you’re inundated with viewings and tenants express an interest, you may have underpriced yourself. In this case, you could raise the asking price as the property clearly attracts people.

The point here is that you can play the market a little to figure out your pricing.

Set the Right Price Today

These tips will help you to adjust your rents until they suit you and the market.

However, you may not want to deal with the hassle. If that’s the case, you need a great property manager.

That’s where Wealth for Life comes in. We offer a great property management service because we’re all investors ourselves. That means we understand the markets and what you need from our service.

Contact us today if you’d like to learn more.

There are all sorts of issues that can arise when you set your rents incorrectly. Here are five tips for making sure you’re hitting the right numbers.

What happens when you set your rents too high?

Potential tenants may love the look of your property. But they’re going to take one look at the price and move on. Why would they rent from you when they can get something similar for less money?

Of course, it’s also possible to set your rents too low. This often happens because investors take a “set and forget” stance with their rents. Or, their property managers aren’t raising their rents appropriately on their behalf.

Wealth for Life rental rate
  • Facebook
  • Twitter
  • Google+
  • Pinterest
  • Gmail
  • LinkedIn

That’s what happened to Stephen Clancy

Stephen Clancy bought two investment properties in 2014. He hired a property manager to take care of them and trusted the manager to serve his best interests.

That didn’t happen.

His property manager didn’t raise either property’s rent once in three years. This is despite the fact that the market grew during that time.

Stephen had enough. He came to Wealth for Life to find a new property manager.

Our team took on the case and immediately put a plan in action. Stephen’s new property manager spoke to all of his tenants. In the end, Stephen increased his rents by $45 for each property without losing a tenant.

That amounted to an annual income increase of $4,680.

As you can see, you can go too high or too low. In both cases, you’re costing yourself money. Going too high means your property sits vacant for long periods of time. Going too low means you’re not getting as much as you should from tenants.

You want to get it right to maximise your returns from your portfolio. Here are five tips that will help.

Tip #1 – Find the Right Property Manager

Stephen’s story shows just how much damage a bad property manager can do. He missed out on thousands of dollars due to his manager’s laziness.

Wealth for Life Property Manager
  • Facebook
  • Twitter
  • Google+
  • Pinterest
  • Gmail
  • LinkedIn

It’s a problem that affects thousands of landlords in Australia. You trust a property manager to know what’s right for you. However, they avoid raising rents because they don’t want to handle the paperwork or they’re scared of losing tenants.

In the end, you’re losing out.

It’s important to conduct thorough research when looking for a property manager. Check that they have a track record of working with properties like yours. And take the time to quiz them on their processes. Ask what they do when they need to increase rents. If they don’t have a defined process, this may indicate that they don’t pay as much attention to rents as they should.

Also, be wary of any property managers that fail to communicate in a timely manner. They’re usually less likely to keep you up-to-date with market changes.

The point is that you can trust a good property manager to set rents on your behalf. The key is to make sure you find a manager who’s up to the task.

However, you may want to handle the task yourself. If that’s the case, the rest of these tips will help you.

Tip #2 – Check Similar Properties in Your Location

The odds are that there are several investors in your location. That usually means there are a few properties available for rent at any one time.

Wealth for Life compare properties
  • Facebook
  • Twitter
  • Google+
  • Pinterest
  • Gmail
  • LinkedIn

The adverts for these properties can be a good source of information when you’re setting your rents.

Look for properties that offer similar features and locational benefits to your own. Compare your rents to whatever the other landlords are asking for. It’s also worth speaking to the property’s real estate agent to find out if it’s the standard rent for the market.

You may find that you’ve fallen behind the rest of the market this way.

Of course, you also have to be wary of overpriced properties. If you’ve seen the same property advertised several times over the last few months, its landlord may want too much money. If that’s the case, they’re not providing a good indication of how you should set your own rent.

Tip #3 – Consider the Property’s Desirability and Local Amenities

What does your property have to offer to a tenant?

It’s an important question to ask from a marketing perspective. You’ll use the information to make your property stand out when you’re advertising it.

Wealth for Life amenities
  • Facebook
  • Twitter
  • Google+
  • Pinterest
  • Gmail
  • LinkedIn

However, it’s also an important question to ask when setting your rents.

For example, let’s say that you have a unit that has a balcony. That’s a desirable feature that someone may be willing to pay an extra $10 or $20 per week for.

Or, you may have a family home that’s close to several good schools. In this case, the location allows you to command more rent than if the schools were further away.

You also have the standard things, such as square meterage and storage space, to consider. The more you can offer of each, the more desirable your property becomes.

Revisit how much you charge if your property has great features but isn’t earning enough. You’ll often find that tenants will pay a little extra to retain easy access to features and amenities.

And of course, the opposite holds true if you can’t offer access to those things. In this case, you may have to charge a little less than some others in the market.

Tip #4 – Consider Your Expenses

In most cases, you want your property to have a positive cash flow. This means that its income is high enough to cover all expenses and give you a little profit.

Wealth for Life your expenses
  • Facebook
  • Twitter
  • Google+
  • Pinterest
  • Gmail
  • LinkedIn

The only time this isn’t the case is when you’re following a negative gearing strategy. This is something that’s only suitable for experienced investors. Plus, there’s a lot of turmoil surrounding negative gearing in 2019. If Labor wins the election, it may become a less viable strategy.

So, you want to go for positive cash flow. And that means your expenses will play a part in determining how much rent you charge.

It’s crucial that you calculate your expenses before buying your property. You need to know how much you’re paying for your home loan. Plus, you have to account for maintenance and all of the other expenses that come along with being a landlord.

The rent you set has to cover all of those expenses.

If it can’t do that without making the property unappealing to the market, you may need to look elsewhere. If you’re in a good location and still struggling to maintain positive cash flow, you may need to raise your rents.

Tip #5 – React to the Market

How potential tenants react to your property can also influence your decision.

For example, you may find that you’re not getting any requests for viewings. If that’s the case, the property may have too high a rent attached to it.

Alternatively, you might get a lot of viewings but nobody expresses an interest. In this case, there’s likely something that you’re missing. Lowering the rent might be a solution here. But if you can identify the issue, you may be able to do something about it.

If you’re inundated with viewings and tenants express an interest, you may have underpriced yourself. In this case, you could raise the asking price as the property clearly attracts people.

The point here is that you can play the market a little to figure out your pricing.

Set the Right Price Today

These tips will help you to adjust your rents until they suit you and the market.

However, you may not want to deal with the hassle. If that’s the case, you need a great property manager.

That’s where Wealth for Life comes in. We offer a great property management service because we’re all investors ourselves. That means we understand the markets and what you need from our service.

Contact us today if you’d like to learn more.

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