What Rent to Charge

So you have a rental property and you want to rent it out, but how much is the right amount?  There are a lot of variables involved to determine the right price. 

First of all the easiest way of course is to employ a property manager. They will be able to tell you what a fair market rate will be. But even if you employ a property manager it is also a good idea to do some analysis yourself. If you do, you will feel more comfortable with the rent rate, and you will also feel fully involved in the process. You don't want to be in a position where you find out that the property manager is over or under charging your tenants.

1st Step -- Research

Find comparable rentals in the area of yours and go to the showings. Look at the property, ask questions on how long it has been vacant. Look at not just the number of bedrooms and bathrooms, but other amenities like dishwashers, waste disposals, heating/cooling, spa pools etc. 

Also go online and find out if there is a wide range of prices for comparable rentals or if they are are all within a tight figure. The more detailed the search, the more reliable results you will produce. Don't just look at one website, look at several and ask lots of questions.

Location

How close its your property to the local cafes, shops and schools? Can you leave the car at home for many common errands? And what about the outlook? Don't underestimate how much people will pay for a view. Coming home to a view of the ocean will give you more of a return than a view into the neighbors bathroom.

Size

It's obvious to charge more for a 3 bedroom over a 1 bedroom. But what about charging more for a 1 bedroom 100sqm rental over a 1 bedroom 80 sqm rental?  This will be where your research will come in, what size/price/rooms comparable research have you come across?

Layout

Is there are natural flow to your place? When you walk in the front door, are you walking into the master bedroom? Or do you have to walk through the whole house to get to the tiny toilet which was an addition out the back? Are their quirks to the house that potential tenants will have issues with? Can you charge them a reasonable rate with the quirks, or will you have to take a hit on the rent to get it tenanted.

Upgrades

Have you recently (or not) renovated the property? Have you added amenities that are not common to comparable rentals? Do you have luxuries like a spa pool, solar heating, lots of storage etc. If you take the effort to spruce up the property after tenants move out, it will hopefully improve the property's value, improve the rental rate and be tenanted faster.

After you have gone through all these steps and now have realized that the numbers aren't adding up (costs vs income) or maybe you are an 'Accidental Landlord'. What do you do?Unfortunately you will need to make some decisions, if you try and rent out out at a higher rate (to cover your costs) then you may be in for many months without any income at all. But if you rent it out at the lower rate, will that be crippling to you? Call in the experts for advice, don't try and work this one out on your own!

What do you think? How did you work out what to charge for your rental?