The best rental price for who - you may ask. You want to earn the most and a tenant wants to pay the least, so who determines the price?
The first step is to compare your investement property with similar properties listed as far as features and location are concerned.
The internet is of course a great source where you can easily find this information - take note especially of how long a listing had been up and how many times it had been viewed. This will give you a good indication if the asking price for a rental is too high for the market!
Speak to local estate agents and establish supply and demand and rentals realized for a similar property.
Consider how you could add value and make yours more attractive to tenants.
For example, we furnish the property with good quality and stylish window treatments (curtains, blinds etc.) and we do it for two good reasons:
Free WiFi or cable is often a real deal sweetener for tenants too!
And this goes for both landlords and tenants.
Consider this: The offered rental is $1000, but you were hoping to lease your property for $1050, so you turned down the $1000 offer.
If your property is vacant for even one month, your annual income will be $11 550 as opposed to $12 000, had you settled for a bit less. (Not to mention the difference should the vacancy period be even longer).
If you can time your property search for those times of the year when the rental demand is low, you may be able to get a notable deduction in your rental. For example:
Incidentally, being critical about a rental property is NOT the way to get a landlord to reduce the rent.
In exchange for a reduction in rental, you could offer the landlord better security on his rental payments - higher deposit or a guarantor such as your parents signing surety for the rent.
Landlords could consider a rental pool. You and other property owners in the same apartment block or development can form a rental pool, or it may be a service offered by your Property Management company. Each owner has a percentage share (based on the best rental price of his property).
Prospective tenants can pick and choose amongst the vacancies without the landlords undercutting one another and the total rent collected is paid out according to the shares.
Landlords can also approach one property locator to present their apartments to potential tenants. In many instances their will be a difference in features from one apartment to the next, increasing the chances of ticking the right boxes for tenants.
Annual escalation warrants a special mention when you calculate the best rental price for your real estate investments. Important: if you address escalation in the initial agreement, it will not be an issue later.
Annual small increases are acceptable, but why don't you consider escalation twice annually as opposed to once. For example: a 5% escalation twice a year as opposed to a 10% escalation once a year. This will appear a small amount to the prospective tenant but will in fact gross you more rental over a year.
If you do not implement annual escalation, the value of your property will be affected. Let me explain. If you want to sell your property and the income that it generates is not on a par with other similar units on the market, the new owner will be faced with a big rental increase and definite tenant rebellion. So it is important to stay market related with your rentals.
Having said that, consider your tenant! We reward good tenants by keeping their rental increases to a minimum, often far less than that provided for in the lease agreement. As said before, even a small increase is preferable to a vacancy.
We have a variety of free legal forms to assist you with your rental property, such as:
For links to more property related information and legal forms.
please visit our Real Estate main page.
For more legal guidelines and property tips, please refer to our Landlord page.
Finally - the best rental price is the one that is paid regularly, on the due date and without any hassles - the ideal situation when you become a landlord.