It’s a common misconception that rents will always continue to increase. Just like a properties sales value, rent adjustments should be made taking the following factors into consideration:
Current Vacancy Rates
Vacancy rates can be effected by supply and demand and seasons, depending on the location of your property. For example, if your property is near a beach, vacancies are generally lower during the summer months or you may be near a university and experience peak periods at the beginning of the year and mass exits towards the end of the year.
Property Specific Market Demand
It’s important to understand what type of property is in highest demand in the area around your property? Will families requiring a well presented house with off street parking and 2 bathrooms pay a premium price in your location or is everyone in your market after an affordable studio apartment within walking distance to public transport.
Ability to Pay
If the average household around your property has a combined income of $100,000 and 1.3 dependants, you would risk extending your vacancy period if you were asking over $570/week for a property typical of the area.
If you were to increase your rent considerably over this figure you could risk your tenant vacating or falling into arrears.
It’s a common misconception that rents will always continue to increase. Just like a properties sales value, rent adjustments should be made taking the following factors into consideration.