At a time when interest rates are high and the property market is booming, it’s no surprise that investors will aim for the highest possible rent. However, this strategy doesn’t always pay off, as can be seen from the following case study:
Meet Ann & Simon who live in Melbourne and, planning for their future, decided to invest in a rental property in the northern suburbs of Perth. The rental amount for this property was initially valued at $550 per week however, because of the Perth rental crisis, the buyers believed they would collect a higher rent and secure tenants swiftly. To their dismay however, two tenant viewings generated little interest and it was only when the price was dropped to a realistic amount, that more interest was received. The landlords had initially based their purchase on an unrealistically high rent, which proved unattainable. Additionally, the inflated asking price led to a three-week vacancy, causing them to miss out on potential rental income.
This case study really highlights the importance of setting a realistic asking price for your rental property that aligns with current market conditions. By doing this, your property will almost certainly be leased faster, and you won’t need to go through the process of reducing the rent after an unnecessary vacancy period.
