How do I set my rental figure?
After getting an investment home loan, you've bought yourself a piece of real estate you think is going to grow in value. Now you want to rent it out and make some money off it while you make your repayments.
If you happen to be a novice landlord, one of the first questions you probably have is how you actually go about setting your rent. Too low, and you're losing out on money; too high, and you're losing out on tenants. There are a few steps you can take to make sure you've set the right asking rent.
Compare, compare, compare
In school, looking at your neighbour's work might've been called cheating, but in the world of property investment it's just called plain old common sense. One of the clearest ways to get an idea of what kind of rent you should be setting is to compare it to the market and the neighbourhood you're in.
Check out the prices in areas similar to yours, as well as the cost of similar types of properties. Is your property located near amenities and transportation? Does it have two bathrooms? Seek out the properties that also have those things in common.
Do the research
Thanks to the miracle of the internet, it's easy to find out a boatload of information without ever leaving your house, let alone your chair. A quick visit to some real estate and housing industry websites should tell you what the vacancy rate is like in your state, or even your part of the city. It will also tell you what the demand is like for housing at the moment.
You might also want to factor in information about your particular town or locality when looking at the state of the market. Are there infrastructure development and jobs on the way? Are houses being constructed?
The proof is in the pudding
Ultimately, you'll get a good indication of whether you've hit the mark once your house is on the market. If you're not getting many people looking at your property or a lot of inquiries, something's obviously not right. If it's not any of the other variables, then it may well be a telling indication that your rent is too high.
Ultimately, it's a learning process, and the next time round you'll be better prepared.