What is the right rent for my property is a major dilemma that property owners get into while they are seeking to rent it out. There is no objective answer to this question as it depends on a host of variables. Like it is for anything else that you are looking to sell or lease, demand supply dynamics also influence the value of rent that your can generate. To set a right rent of your property it is important that you first understand the factors that would impact the demand of your property.
Understand what the market is ready to pay and what price competitors are renting properties at
Look at the recent newspapers and observe the advertisements dealing with property rentals in the same area where you own the property and want to rent it out. Benchmark the rent of those properties which most closely resemble yours and are closest to your location. This would give you a base price around which you can set a rent for your property. Those properties or apartments which get rented out faster are those that are rightly priced. Rightly priced properties do not imply that the owner is renting it cheap, but these are those, which customers find valuable and also fulfill their requirements. A very good property or an apartment may not find customers if they are discounted too much. A discounted price makes customer suspicious and he feels that there would be something wrong with this property that he right now is not able to find out.
Understand whether your property deserves a premium or discount to market prices
Not all properties in the same area would command the same rent. Rents for properties in the same area would vary depending on the size of the property. Understand the demand dynamics – are there enough people who may be willing to rent a property of the same size in the particular location. If your property includes more amenities (like a cupboard, sofa, etc) than other properties, you should charge a premium for the same. In case your property is located in a building that is in a better condition than others in the same area, you may still command a premium. A garden facing property can get a higher rent than a property with a parking view.
A right rent should leave you enough profits
The right rent should help you recover all your expenses on the property and still leave you with some profits. The rent should ideally cover you expenses including that of repairs and maintenance as well as the vacancy costs. Vacancy costs are included because you may not be able to rent your property 365 days a year. Hence the amount of rent that you charge should also help you earn enough money to spend on repair and maintenance, even when your property is lying vacant.
The right rent would vary with time
Once you rent out your property, actively monitor the market as demand supply dynamics tend to vary with time. When the economy is in a recession, you would generally find more people willing to take a property on rent, than when the economy is doing well. In a growing economy people tend to spend more on buying property than taking it on rent. Be aware of the changing trends and set the right price for your property.