Why the highest rent may not always be the best rent

Posted 15th November 2019 by Pillar Property

Our role as your property manager is to maximise the rental return on your investment property – however, obtaining the highest rent per week is just one component of ensuring that your investment delivers the expected returns.

The term “best rent” refers to the optimum rent that your property can achieve without causing your tenants to vacate the property due to the rent being above market or; if vacant, the rent that be acheived in a quick timeframe to minimise extended days of vacancy and lost income.

A consistent income stream is vital to ensuring the financial success of your investment property.

We have found that properties that have a rent slightly below market levels have a higher occupancy rate which means lower vacancy and fewer ‘nil’ income days. Another important factor that is often overlooked by investors is that, each time a tenant vacates and another moves in, there will be inevitable wear and tear on the property, which again adds to the financial burden of a vacancy.

When we suggest a rent increase or suggest that the rent remains the same, depending on market conditions, we make the recommendation on the above grounds to maximise the financial return on your investment.

Whilst it is often tempting to squeeze an additional few dollars per week from your tenant, it is important to remember that today, tenants are far better educated due to the growing ease of access to information of all properties on the rental market. In attempting this squeeze, many property investors are causing increased vacancy and loss of rental income – all for the perceived benefit of achieving above market rent.

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