How to Determine Rent Charges
Rent prices fluctuate with the economy, but there are particulars you can look at to determine a median rental range for your investment holiday property. Whether you own a beach front home that you use for holiday or purchased a rural home to use as an investment home until you retire, knowing how to price your rental will affect the overall profit you return on your initial investment. Besides looking at the overall economy and current rates of rents around Australia, you also need to factor in any costs you’ll incur for having a steady repair man available for emergency repairs.
Determining a Median Price
Depending on how long you plan on using your Australian investment property as a vacation rental will determine the overall return you get on your initial investment. When deciding on a general rent price, which means a rental amount that you won’t go below, you need to take these things into consideration:
- Mortgage costs (including taxes, fees, and other costs. You should keep a floater amount for repairs available, for instance!)
- How many bedrooms and bathrooms does the home contain?
- What is the age of the property?
- Are you renting it furnished or unfurnished?
- Are you only renting during peak holiday times or all year round?
- Is the property in a popular city or is it more rural and further away from amenities?
- What’s the average rent in the area for comparable properties?
The larger and more luxurious a property the more you can ask for rent. Also, properties located in populated cities that have plenty of shopping, entertainment, and restaurants can garner higher rents than rural properties. Older properties are also usually cheaper, unless the home sits in a historical district that demands a higher rate. If renting your Australian holiday home during peak holiday times, you can get a higher rate since tourists will pay more since they’re only staying temporarily. If you are able to stay booked during the holiday season, you may find that you don’t need to rent all year round to make a return on your profit.
Determining the Fees
Once you’ve determined the least amount you will accept for rent, it’s time to add in the other fees. Begin by browsing rental listings to make sure your pricing is competitive. Then determine if you want to offer yearly leases or 3 to 6-month leases. If you will be handling the gas, electric, and water you will need to ask for a deposit.
Rentals in Australia also require a bond to be collected. This is usually at least one month’s rent, and can be refunded to the renter if the property is kept in good condition and easily rented after their lease is up. Lastly, you will want to include any monthly fee you pay to keep a handyman on call. It’s typically important to have a repairman on retainer that you can call in an emergency. By performing some research on local rentals and adding in your extra fees, you can afford to rent your property all year long and make a profit.