When you buy an investment property, you will be faced with one of two possibilities. The property is vacant or an established tenant is already paying the rent. If it’s vacant, you will obviously need to source a suitable tenant as quickly as possible to cover the property’s expenses. You may need to also review your property manager’s performance and select a new property manager to better service your needs.
If the property is already leased, it will be important to ensure the tenant is paying a reasonable market rent, and that the current property manager is able to provide a level of service which aligns to your requirements.
Rental Property Income Myths
There are some time-honoured, unwritten rules amongst savvy real estate investors that say you should be able to achieve around $100 per week for every $100,000 you have invested in purchasing a property. So, if you’ve just invested $450,000 in a two-bedroom apartment, they suggest you’d be expecting $450 dollars a week in rent. Unfortunately, this is a myth. The rental market has its own set of local rules and they don’t always align with investors’ expectations. It is critical that you do your own research on what’s available on the market and consider getting a professional opinion from a First National Real Estate property manager.
Comparing Rental Properties in the Local Area
Start by doing an online search of vacant rental properties in the same suburb as your investment property. If it’s a house, only compare with other houses. The same goes for units. Put in the number of bedrooms, bathrooms and parking spaces that your property offers and you’ll immediately have a list of comparable properties that are currently vacant.
Pick out the ones that seem most similar to yours and then set aside time to attend their open inspections. You’ll get two things out of this. Firstly, you’ll gain a genuine appreciation of how competitive your rental property will be against those properties and whether it is worth less or more. Secondly, ask your property manager what other rental properties they have in the same price range and see what they say.
Ask for a Rental Property Appraisal
By now you will have a pretty good understanding of what seems like a realistic rental price, and a list of property managers and estate agencies who appealed to you due to their professional conduct, marketing approach, or comprehensive knowledge and advice.
Asking for a rental appraisal is a good way to assess a property manager’s local knowledge and a good next step before signing a property management agreement with them.
Rental Property Marketing Campaign Tips
There’s really only one way left to find out whether you have put a fair price on your rental property - ask the market. It will tell you very quickly. If you’ve decided to appoint a property manager, discuss a pricing strategy to maximise your rental income and get your marketing campaign underway as quickly as possible.