Q. I own one investment property – is there a certain calculation you can do to work out how much rent you should be charging?
Unfortunately, there isn’t a magical formula that can work out exactly how much you should be charging your tenants. But there are certain things you can do to ensure you are not charging too much or too little.
Firstly, you need to research the current rental market as this will give you a realistic, up to date figure of what other rental properties are charging. Take a look at population statistics, median prices and rent as well as vacancy rates. But remember to stay focused on areas around your property as this will be more accurate to your own property.
Secondly, speak to property managers who have a lot of experience in the industry. They may have a lot of inside information about the current market and what tenants want. They may also have more in depth information about the local area including statistics that may not be available on the internet yet.
Thirdly, go have a look at other properties available for rent around your area. This way you can compare properties yourself and see what they have on offer.
Finally, you need to be cautious if you decide to increase your rent, especially if you already have tenants. It’s important that you can show the rent is justified (eg. it was below the market average) and that you also give the tenant sufficient notice before making the change. Each state has laws around tenant and landlord rights that you must adhere to.
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