Hi,
We have recently purchased a house in one of those mining towns with a rental shortage. As there are no other rental properties available or advertised anywhere we are stumpted about trying to work out what rent we should ask for it.
To provide a bit more background, we live in a different state which makes it a bit harder and we don’t really want to ask the real estate agent, as we would prefer to stive higher and set the terms rather then just accept what someone tells us.
Does anyone have any ideas or suggestions?
Kind Regards,
Ana
Sorry, I forgot to add that we have 6 weeks for settlement which buys us some time to investigate.
If we knew the town or state, someone may be able to give you a better idear. [cigar]
David
ask a different agency that you dont plan to rent it through to give you an appraisal. Then you will get a rough idea.
But why the h3ll would you buy a property and not already know this???
What is the rental return %?Originally posted by Ana:Sorry, I forgot to add that we have 6 weeks for settlement which buys us some time to investigate.
I would have assumed this would have been one of the crucial planks in your due diligence process, well before you signed the offer to purchase.
Finding out rental levels now is like the proverbial bolting horse.
If it’s $ 70 per week…..what will you do ??
Hello Ana
You certainly don’t give anyone much to work on. [smiling]
Seeing as you have already bought the property maybe you could tell us a bit more about it. Maybe someone on the forum has a property in the area.
Rent will depend on location and number of bedrooms/bathrooms/ modern or dilapidated, nice garden etc.
As stated, you should already have a good idea of the rent you need but since you don’t, I actually don’t see any harm in asking the agent you bought the property through. You are not bound by his estimate but it gives you a starting point.
You can also ring up other agents in the area and ask them too. You don’t have to tell them you have a house for rent. You could just ask them what you would have to pay to rent such a house.
If as you say there is nothing to rent in the area once you have a ball park figure you can always ask 10 or even 15% more and let the market decide if you’ve priced yourself out.
Cheers
ElkaI think you will find Ana is looking for a way to work out the rent based on the fact there is a rental shortage and hence an opportunity to add a premium onto the current going rental rate.
The rental levels are known. How to determine how much extra can be asked for, given the scarcity factor, is not.
But why the h3ll would you buy a property and not already know this???Ease up guys – when someone asks for help on the forum, show a bit of consideration and provide it. Don’t just take it as an opportunity to take a swipe.
All the best Ana.
Wendy“Say what you want and be who you are because those who mind don’t matter and those who matter don’t mind.” – Dr. Seuss.
Wendy Chamberlain | Chamberlain Property Advocates
https://www.wendychamberlain.com.au
Email Me | Phone MeMelbourne Buyers Agent & Sellers Advocate | Independent | Flat Fee
Originally posted by Ana:Hi,
We have recently purchased a house in one of those mining towns with a rental shortage. As there are no other rental properties available or advertised anywhere we are stumpted about trying to work out what rent we should ask for it.
To provide a bit more background, we live in a different state which makes it a bit harder and we don’t really want to ask the real estate agent, as we would prefer to stive higher and set the terms rather then just accept what someone tells us.
Does anyone have any ideas or suggestions?
Kind Regards,
Ana
A good rule of thumb is to find out what the average income is for that area, and then work out 30-35% of that figure. I think you could find it out on the Residex site under suburb profiles, or maybe the local council website.
35% of income is about the cut-off point for people’s affordability for housing costs i.e mortgage or rent. After that they struggle to make ends meet. You can safely ask up to 30% without imposing undue hardship on your tenants. If the average rent is much lower than this figure, then decide on a figure somewhere in between to be safe.
You want your tenants to be able to handle the rent payments easily.Cheers,
Marc.
[email protected]Thank you for everyones input. I should have mentioned that we do have the rental history figures and they have gone up quite a lot in the last 6 months. Because there are no other rentals available and are becoming more and more scarce (as are properties for sale), we have an opportunity to set the mark on what we want the rental to be.
I was hoping that maybe someone had an already used formula where they say for example, use last known rental figures and then increase by z%. I should also mention that the average income in the area is quite high, most of the families renting, work for one of the mine companies in the area and move there for 1-2 year contracts and the locals have done really well from the high demand for staff and support network for the 3 and soon to be 4 mines in the area.
The reason that we got the house is because we were able to negotiate $30K below the average price for a similar house in the area and we were even pretty conservative in our rental figures in working out the rate of return which was still over 10%. Now we have an opportunity for setting a new standard for rentals for an average house in the area (3 bedroom, 1 bathroom) and we’re trying to work out how to go about this so that we get the best rent that we can, but still be fair and not go overboard.
Many Thanks,
Ana
Hi ana – if you were in the state I would have suggested stuff like a rental open home and get feedback from the market that way – you can be very creative. There is no reason why someone could not do this on your behalf but when you ask perhaps you will here all the reason why they don’t do this (no! think positive).
I recently had a property of my own that I believed was worth quite a bit more than appraised by an agent. I set a figure and advertised it on the net. My new rent is $40 per week more than the agents appraised so it has to make you wonder – 180 rent assesment – tenant on 12 month fixed term lease for 220 per week .
As I don’ tmanage myself – now I will shift the day to day off to a property manager. You could perhaps try something like that.
Where is your target market and how would you reach them. Do the mines have accomodation officers – would a flyer in the closest and most popular pub be appropriate.
just curious to know if the mining town you are talking about is in central QLD. If it is a could give a reasonable idea on the type of rent you could get as I am from that area
do not go any lower than 5% yield . = rent p/a / property value * 100
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