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Is Your Rent Too Low, Too
High or Just Right?
- Free Landlord Help PART 2
Figuring out the perfect rent for your property with our free landlord
help is crucial... If you want to maximise your rental income while
keeping vacancy rates to a minimum. Find out if the rent you are
charging your tenants is too low or too high in this Part 2 of our Free
Landlord Help to Rent Payments.
Do You Know
Effective Ways to Set Your Rent? Click here for Part 1 of this Guide.
Why
You Should Avoid Overcharging Your Tenants on the Rent
Naturally
it's every landlord's dream (including mine) to be able to collect
jumbo rents every single month but there is a heavy price to pay if you
overcharge.
When you demand sky high rents, a few bad things can
happen. Firstly your rental property may end up suffering from long
periods of vacancy because it takes forever just to find someone who is
willing to pay your asking price.
Remember that for every one
day that your rental property goes without a tenant, you are losing
precious rental income. Most rental properties have vacancy rates
ranging from 5 to 10% depending on the local demand. If your rental
property is empty for more than 10% of the time, it may be a sign that
your rent is too high.
Another stinging drawback of overcharging
rents is that you will end with a very small pool of potential tenants
and finding a pleasant renter will not be easy . As we have always
stressed, finding a good tenant is very important to ensure your
tenancy is both profitable and worry-free.
If you ask around for free landlord help and advice,
most professional landlords and full-time property managers will rather
collect a bit less rent every month than to suffer at the hands of a
nightmare tenant.
What
will Happen if You Set Your Rent Amount Too Low?
On
the other end of the scale, we have landlords who are either too casual
or generous and undercharge their tenants. While it's not entirely a
bad thing to ask for low rents because you can slash your vacancy rates
and have stable rental income, there are too many compelling
reasons to give yourself a raise in rental income.
Remember as a landlord, you own a business and not a charity. If your
rents are too low, you will have problems covering your rental expenses
every month. Will you have enough money if you have to suddenly shell
out a huge sum for emergency repairs?
If you are planning to sell off or refinance your rental property soon,
low rents will also depress the value of your rental property. When
rental property investors and mortgage lenders are looking at your real
estate, your rental income will be an important factor. The higher your
monthly rent, the higher the value of your rental property.
If you think that it's high time to raise your rent, you can always
make use of our rent
increase letter to send your tenant a notice in advance.
Personally if I have an excellent and low maintenance tenant, I may
charge him a rent that is slightly below market rates to entice him
into staying on. However I will still make sure I am able to cover my
rental expenses before even thinking about it.
What are Your Most Reliable Methods
for Finding Out the Right Rent?
Finding out the perfect rent for your property is so crucial yet it can be quite tricky at times. How do you decide what is the right rent amount to charge your tenants? Share your valuable experience with everyone here - We will love to hear your tips, comments and free landlord help:
Do you want to learn more practical must-know facts on dealing with tenants?
Return
from
this Free Landlord Help page to our Managing
Tenants guide
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