Is your rent appraisal accurate?
Many property investors opt to do away with agents to determine the correct rent appraisals in order to minimize their expenses, and rightfully so because anyone can do their own rent appraisals nowadays—as long as they are aware of the right search criteria to use and the different tools available to them.
The most important key to making an accurate rent appraisal is to be in touch with the current market, according to Eezirent’s Diane Bukowski. Rental markets usually don’t stay in the same state for a long period of time—in fact, the rent that the previous tenant paid may not be the same price that the next tenant will pay, no matter the time interval in between the transition.
Whether the price will increase or decrease is largely dependent on the forces of supply and demand.
The best first step for landlords who choose to do their own rent appraisals is to find comparable properties in the same location with the same features as a basis for the rent price that they will set.
“The only tool you need is free to access and it is the best source of current listings available—realestate.com.au or domain.com.au,” Diane said.
“Research shows these are the most commonly used parameters used by tenants when they search the net: suburb, number of bedrooms, number of bathrooms, [and the] number of car spaces.”
After finding comparable properties, narrow the field down by excluding assets that have noticeable differences from your own investment property. The more specific factors that tenants use to find a property to rent include the age of the property, the specific location (proximity to public transport and highways), street appeal (landscape and paintwork), and outdoor entertainment facilities.
At this point, you may already have an idea of what an ideal rent price is based on properties similar to yours. Aside from the factors stated above, properties with the following features also get more demand: air conditioning/heating, age and quality of kitchen and bathroom, storage capacity, and security features.
These features could help you assess the final rent price to set for your investment property.
However, despite the thorough research you conduct, there is a possibility that inquiries and inspections don’t come in at a high rate.
“If you get the inquiries but no one is putting in an application, this means the rent is a little too dear, so consider a small rent reduction. If the inquiries are few and far between, the market is telling you that the rent is far too high,” Diana advises landlords.
“The key to an accurate appraisal [is to] deal in the current market… use the free tools available… start with a broad search then narrow it to specifics, think like a tenant instead of a landlord, but most importantly, listen to the market when the property is advertised and respond to what it is saying.”
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2020 vs 2021: How lockdowns have impacted the market