The market is competitively clustered with investors looking to make an honest return on their long-term investment. So what price should you set to stay within the competitive streak but will set you apart from the competition?
There are many aspects to consider when setting a rental price and in order to set a market competitive price, one needs to ensure they have all been checked. Taking the time to do the necessary research, marketing and brainstorming will be hugely beneficial in terms of setting the rental price that will separate you from the competition. With the access to knowledge being a click of a button away, tenants have the means to research and compare the various properties on the market. This results in a more cautious and informed approach to the rental market as a whole. So how do Landlords go about establishing an accurate rental price?
1) Get an estimate for your property
Find the estimated value of your property through a trusted rental agent that has good knowledge of the market as well as the area your property is located in.
2) Establish the sale value of your property
The established sales value of your property allows the investor to set a fair rental price for the area. The national average yield (gross) on rental properties or their rental-to-sale-value ratio is approximately 6% to 7%. Different suburbs will naturally have different rental price brackets.
3) Compare the various offerings on the market
Do an online comparison of the various offers that fit into the same bracket as your property, this will give you an indication of what the competitors are asking. Remember the better value units will often be rented first.
4) Price your property fairly
Price the rent of your property fairly, honestly and reasonably to draw in some reasonable and fair tenants to your property. If the investor is not receiving a good response online and very few tenants are inquiring, then the price may have to be re-evaluated.
5) State what your property offers tenants
This is your sales pitch to the tenants. What will the tenants receive from the property and if this is well set up, the interest within the property will be higher.
6) Do as much research as you can
The best way to determine what your rental price should be is to do your homework and research as much as possible. Find what the competitors are offering and compare what you are offering and your rental price to that of theirs.
Obtain a second opinion and the more research and knowledge you accumulate the easier it becomes in determining that sweet rental price.
Why not let the leading rental management company in South Africa Just Property assist you in determining the right rental amount for your property.
Written by Timothy Paine, Just Property Social Media Marketing