The Rental Value of My Investment Property
What is the Rental Value of My Investment Property?
(2 Minute Read)
4 Key Concepts when Renting Your Investment Property
Understanding your investment property means knowing the worth of your property's rental value. To find the number you're looking for, there are several concepts you can take on board to ensure you're not pricing yourself out of the market.
Understanding Expenses, Rent & Rental Yield
The vital first step to establishing what you need to meet your specific financial requirements is understanding the expenses incurred with property management and ownership. As an investor, you must take into account:
- Insurance costs
- Mortgage Repayments
- Maintenance Costs
- Investment Taxes
- Vacancy Period Costs
Calculating a monthly budget including the above allows for profitability retention, creating the liability total on your investment balance sheet. Keep this summary in mind, as this will play a critical role in your decision after the following concepts.
Doing Your Own Research
Take to the internet and discover what your local market is doing. Of course, as the owner, you decide the final rental rate, but finding and making an informed decision is vital.
Review higher and lower quality properties; compare yours; ideally, look at the disparity between asking prices. Finding the middle or a ballpark enables you to get an idea of your starting point.
The main comparison should be with properties of similar quality to yours. For example, observe the differences between additionals: pools, high-quality flooring etc. and note if the asking prices vary accordingly. Again, the surface trends are a good starting point; but consulting a professional property manager gives the best results.
Professional Evaluations & Property Management Experts
Your own research can only get you so far. Engaging a property management professional is the key to accurately understanding the market and getting an appraisal that leads to your desired figure.
A local professional will provide local knowledge and consider the factors that contribute to an accurate rental price for your investment property. Experts in the property management field will provide appropriate insight without the emotional attachment to the property.
Additionally, a property manager will not only provide a suggested rental guide for your investment property; their services extend beyond. Expert property managers facilitate all aspects of operating your investment property, from maximising capital returns to staying on top of legislative conformity.
At PRD Penrith, our Property Management Team provides expert advice and goes above and beyond for your investments. Our services span all of your management needs, dedicating specific team members to engage with your investment thoroughly, bringing a wealth of local knowledge to the foreground.
Understanding Demand and the Market
With both your own and professional appraisals in mind, you must understand and consider demand when managing your investment property. Rental value can shift considerably concerning demand. This can have both positive and negative effects.
The most common effects of shifting demand include:
- When the economy is weak, the demand for rental properties increase as purchasing a property becomes less attainable.
- When interest rates are lower, renters with deposits saved consider buying over renting, reducing rental demand and yield.
- With a weaker economy, smaller, more affordable apartments rise as people attempt downsizing for financial security.
Demand and the market play vital roles in determining your rental return and yield. When establishing how best to manage your investment property, always keep this in mind.
Create the Figure
Bring all of the above concepts together, the liabilities and costs of management, the rental yield, and the professional and individual advice to create an accurate appraisal of what your investment property is worth in the rental market.
Be aware of the market and rental demand when devising a realistic property appraisal. Your investment property management is essential; manage smarter with PRD Penrith.
