Financial Planner: “Do Your Due Diligence when Setting Rent Prices.”
Announcement posted by Purely Finance 09 Oct 2014
Financial planners in Perth reveal important factors that determine rent prices.
Perth, WA, 9 October 2014 - For new landlords, one of the more difficult parts of the process is determining how much rent to charge tenants. Rents that are too high can cause vacancies and trouble finding qualified tenants. Rents that are too low can cause the property to be undercapitalised.
Even seasoned professionals have to work hard to maintain the right balance when pricing rental properties. For newcomers, it can be much more difficult. The worst part: the stakes are high. A mistake either way can cost thousands of dollars and even end up resulting in the loss of an investment property.
According to Nick Aves, Director of Purely Finance, a financial planning and loan brokering firm in Perth, it is important to conduct thorough market research when figuring out how much to charge for rents:
“There’s no way around it; you have to do your due diligence when setting rent prices. You have to know the market like you know the back of your hand. Especially in a market like Perth, there isn’t a lot of room for error. If you don’t do your research correctly, it can cost you thousands of dollars. You can even end up losing a property if you make too big a mistake.”
Conducting Market Research
The time-honoured traditional method for doing market research is to look up “similars”: homes with similar features in the same suburb or neighbourhood. The method involves finding enough homes of similar size and build in the same area to constitute a sufficient sample. That will provide a range of rental prices and a mean rental cost for similar properties.
Many property owners opt to take a “shortcut” and allow property managers to do the research for them. While this is seen as a very good idea for the time-strapped, solo property investor, Mr Aves recommends that landlords and property owners do their own research so they know exactly how good of a job the property management team is doing.
Property Management
Mr Aves also recommends that most investors hire professional property management. High-quality property management firms do all of the work for the investor, freeing the investor’s time for other pursuits. A great property manager knows how to screen tenants, find qualified tenants, adjust rent levels and keep an investment property filled with qualified tenants.
In addition, the property manager handles all face to face business with tenants, including 2:30 am calls to fix a broken toilet. The property manager keeps the property maintained and conducts regular visits to inspect the property.
What Renters Want
Rental prices are contingent upon the basic law of supply and demand. One strategy Mr Aves recommends is to only purchase properties that are attractive to renters. Attraction plays a large role in the rent that any property can command.
The main factors are appearance, function and proximity to amenities such as shopping, medical facilities and transport.
Mr Aves concludes, “Do your due diligence and everything else will fall into place.”
The financial planners at Purely Finance provide a plethora of financial services in the Perth area. To learn more or for a consultation, call (08) 9453 8888 or visit their website: http://www.purelyfinance.com.au/.
Even seasoned professionals have to work hard to maintain the right balance when pricing rental properties. For newcomers, it can be much more difficult. The worst part: the stakes are high. A mistake either way can cost thousands of dollars and even end up resulting in the loss of an investment property.
According to Nick Aves, Director of Purely Finance, a financial planning and loan brokering firm in Perth, it is important to conduct thorough market research when figuring out how much to charge for rents:
“There’s no way around it; you have to do your due diligence when setting rent prices. You have to know the market like you know the back of your hand. Especially in a market like Perth, there isn’t a lot of room for error. If you don’t do your research correctly, it can cost you thousands of dollars. You can even end up losing a property if you make too big a mistake.”
Conducting Market Research
The time-honoured traditional method for doing market research is to look up “similars”: homes with similar features in the same suburb or neighbourhood. The method involves finding enough homes of similar size and build in the same area to constitute a sufficient sample. That will provide a range of rental prices and a mean rental cost for similar properties.
Many property owners opt to take a “shortcut” and allow property managers to do the research for them. While this is seen as a very good idea for the time-strapped, solo property investor, Mr Aves recommends that landlords and property owners do their own research so they know exactly how good of a job the property management team is doing.
Property Management
Mr Aves also recommends that most investors hire professional property management. High-quality property management firms do all of the work for the investor, freeing the investor’s time for other pursuits. A great property manager knows how to screen tenants, find qualified tenants, adjust rent levels and keep an investment property filled with qualified tenants.
In addition, the property manager handles all face to face business with tenants, including 2:30 am calls to fix a broken toilet. The property manager keeps the property maintained and conducts regular visits to inspect the property.
What Renters Want
Rental prices are contingent upon the basic law of supply and demand. One strategy Mr Aves recommends is to only purchase properties that are attractive to renters. Attraction plays a large role in the rent that any property can command.
The main factors are appearance, function and proximity to amenities such as shopping, medical facilities and transport.
Mr Aves concludes, “Do your due diligence and everything else will fall into place.”
The financial planners at Purely Finance provide a plethora of financial services in the Perth area. To learn more or for a consultation, call (08) 9453 8888 or visit their website: http://www.purelyfinance.com.au/.