As the cost of home finance increases alongside every interest rate increase, the demand for rental properties increases too. However, the increased cost of living has impacted how much money consumers have available to spend on rent. Pricing a rental unit fairly will be crucial to avoid long vacancy rates within the current market.
“Understanding the local rental market is crucial for both determining an appropriate rental rate for your property and attracting good tenants,” says Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa.
“Overpricing your property may result in longer vacancy periods, while under-pricing could attract tenants who cannot truly afford the property. Those who set rental rates that are competitive and are in line with market trends are more likely to attract quality tenants,” he adds.
What to consider
When deciding what rent to charge, a landlord can either conduct some research themselves or allow a rental agent to tap into their resources for a more accurate view of the following:
Competitive market analysis: Review the rental rates for properties that compare with yours in terms of size, location, and amenities. This will help you to establish a baseline on which to determine a competitive rate for your property.
Take vacancy rates into consideration: If there is a large number of properties to let in the area, you may need to carefully consider adjusting your rental price to attract consistent and reliable tenants.
Consider local economic factors: Take into consideration what is happening in the local economy before setting the rental price. When things like interest rates, inflation, and unemployment levels are high, then rental prices will need to reflect that reality.
Internal and external drawcards: The unique features that set your home apart from other similar rental homes in the area can help you charge a higher rate. Nearby employment opportunities, infrastructure, and access to amenities (such as schools and hospitals), and crime levels can all influence the property’s appeal to prospective tenants and can push up rental prices in the area.
After pricing the home correctly, landlords will then need to select the best applicant. A professional rental agent will screen prospective tenants on a landlord’s behalf to ensure that they have the best chances of securing a reliable tenant.
“A good rental agent will talk to the tenant’s previous landlords and employers to get a better understanding of the tenant's overall character and reliability. They will also verify their income and run a credit check on the prospective tenant to make sure they do not have a history of missing payments or making late or partial payments,” says Goslett.
To give your rental property the best chance of success, Goslett recommends enlisting the help of a managing rental agent. “Your local property practitioner will help you find and retain good tenants so that you can achieve long-term stability and profitability from your rental properties,” he concludes.
Writer: Kayla Ferguson