How much rent should you charge?

If you are a first time property owner or landlord then the number one question that may be on your mind is how much you should charge for rent. Whether you are renting out a room, a house, or an apartment the amount that you should charge is the golden ticket decision, because the result of your decision is going to decide if your rental endeavour is profitable or not.

There are many factors that you have to consider before setting a price that include considering your costs, any mortgage still outstanding on a property, the area the property is situated in, nearby competition and, of course, what you could reasonably expect someone to pay.

The first thing you need to think about are your costs, because you want to make sure that over time the rent is going to offset your costs. Obviously, you do not want to lose money while renting a house or apartment so the minimum rent that you can consider is going to have to be aligned with the associated costs of being a landlord.

Things you should include in your costs include the mortgage you may pay on the property, the costs of maintenance, and the cost of landlords insurance. When you add these together this is your minimum rent. The next thing you need to consider is the area that the property you are hiring is located in. Area and region has a lot to do with the equation since every area has its own set average rent.

Therefore, you need to do some research to determine what the average rent is in your location, and keep in mind factors such as the cost of living and related factors. Cities, for example, generally demand higher rents than suburban areas as do holiday locations since these are seasonal expenses that people will often consider paying more for.

Of course, while you are figuring out these factors you will also need to consider what competitors around the same area are charging. For this, you will need to be objective and look at properties that roughly offer the same space and amenities that you do.

By researching competitors you can get a good idea of what to charge, and what people will be willing to pay. Obviously, you will need to offer an extra perk such as easy access to transportation in order to get their attention, or be willing to undercut the competition a bit. Factors such as furnished or unfurnished are also going to play a role in the rent that you can charge.

Finally, you need to set a rental price that you agree is fair that allows a little room for negotiation if needed. With holiday homes or student rentals you may have to negotiate or offer special deals during certain times of the year, so make sure that your rental price can allow for this so that the person you are renting to will consider the rate a good deal, whilst you know that you have achieved about what you expected from the rent.

propertynews