Don’t be a greedy landlord. Don’t be too generous, either.
Set a fair asking price for your rent in order to minimise void periods and to maintain a healthy and sustainable cashflow.
Strange. In the last week I’ve had 2 landlords email me with lengthy descriptions of their properties, followed by the question, “how much rent should I charge?”
I guess I should make it clear that I’m not a letting agent on my contact form, because I’m really not. While I do appreciate emails with lengthy descriptions of properties…actually, no, I don’t. So stop it.
I’m actually surprised that landlords are asking me how much rent they should charge, because obtaining the answer is pretty simple. Or perhaps it’s not all that simple, and I’m just being a patronizing know-it-all knobber. In any case, it is an important question that needs answering correctly before marketing a property.
I see many landlords make the mistake of being ridiculously unrealistic with their asking price, whether that be under or over valuing (it’s almost ALWAYS over valuing, though). Overpricing can be an extremely expensive mistake to make because it could mean the property remains vacate longer than it has to be, which will effectively cost more than having a realistic asking price in the first place. Obviously if you undervalue, you’re immediately losing out on monthly profits. So whichever way you go, you’re losing out in the short and long term.
Landlords commonly overprice their properties because they put their heart and soul into getting a property ready, so they put a value on their blood, sweat and tears, which gets passed onto the asking price. In reality, tenants won’t give a shit how or why a property looks the way it does, as long as it meets standards. So refrain from passing on that stealth tax, it’s ridiculous.
Before I start marketing a property, I check to see how much other landlords are charging for similar properties. When I say “similar properties”, I mean in terms of location, size of property (number of rooms), type of property (furnished/unfurnished) and condition of property. This allows me to see the current rate of what I should be expecting to receive for my property.
Check for similar properties on Rightmove
This is by far the best method of finding out how much rent you should be charging, in my opinion.
Find similar properties available for rent, in the same area, to the one you’re looking to rent on Rightmove, and find the average rental price.
It might also be worth checking the other major property portals, like FindAProperty, PropertyFinder, and Zoopla.
Check for similar properties on Gumtree
Besides from checking the major portals like Rightmove, I also check on Gumtree for similar properties.
I check Gumtree because a lot of private landlords directly advertise their properties on there, whereas on Rightmove, letting agents advertise for landlords. Consequently, on Gumtree you’re able to see what landlords (not letting agents), like yourself, are expecting to receieve. Some times landlords have different ideas on what the rental rate should be compared to letting agents, and that’s always interesting to see.
Check local newspapers
If Rightmove and Gumtree don’t have many properties available for rent in your area, you may find it difficult to identity how much you should be charging. In that case, it’s worth checking your local newspaper. Most local newspapers will have a property section with properties available for rent in your local area.
Check local letting agents websites
Similarly to checking the local newspapers, it’s always worth checking your local letting agents websites and/or shop window if you can’t find similar properties on Rightmove and/or Gumtree.
Consider extra commodities
It’s important to carefully price your property because the biggest mistake you can make is to misjudge the value of your property. If you overvalue, you run the risk of scaring tenants away, and you may find yourself with a property that’s vacant longer than it needs to be, which is an expensive mistake. If you undervalue your property, you won’t be maximizing your full earning potential, which again, can be an expensive mistake.
If you happen to find a very similar property to yours by using any of the methods listed above, make sure you compare the commodities. For example, features like white goods, furnisher, garage, parking space, and garden space will affect the asking price. Needless to say, if you’re offering any of those features while the one you’re comparing your property to does not, you could very well increase your asking price accordingly, and vice versa.
Talk to a letting agent
Even though you may not want to use a letting agent to market your property, it might be worth tapping into one or two of their minds for local knowledge. Simply describe yourself as a landlord that will be shortly looking for tenants, and you’re currently in the process of gathering information about how much rent you should expect for your property.
Local letting agents will know how much rent your property is worth, and more importantly, they’ll know the climate of the area. For example, some areas are notoriously sought after by tenants they’ll know about it. If that’s the case with your property location, you’ll have the advantage of low supply and high demand. Draining that kind of information is useful.
But be careful, I’ve often found that some letting agents drastically inflate their quotes to get landlords interested in their service. With that said, take their figure with a pinch of salt if it sounds too ambitious, and talk to a few different agents for clarity.
The most important tip I can offer is to be realistic, and don’t allow greed to contaminate your asking price.
Does anyone else have any tips, advice or thoughts on how landlords can determine how much rent they should be asking for?