Your Glasgow rental property is an investment that you want to maximise the return on. However, setting your rent at the correct market rate is of utmost importance for many reasons. As property management specialists that list rental properties on a daily basis, we have listed 3 reasons why you need to carefully consider what level to set your rent at compared to similar local properties.
Longer Void Periods
Void periods are a profit killer. Depending on how long the void period is, it can quickly wipe out the difference you are looking to gain from trying for £100pcm over the market rate. Not only do you have no rent coming in, you are also accruing expenses during this period (council tax if furnished and utilities charges). You will also have to make void period visits to check on the property. Sure, sometimes you can get lucky and strike the perfect tenant who thinks that your property is brilliant and has no issue with the inflated price, but this is not common.
People applying for properties that are priced north of the appropriate market rate, in general, are likely to be desperate. This could purely be down to the fact that they have come from another country and need accommodation immediately. However, people willing to pay over the market rate are usually desperate for the wrong reasons. This can be because they have been knocked back from several other properties, have bad credit or are leaving their existing accommodation in a hurry on bad terms and can’t provide references. You might also find they bid more than the asking price, offer several months rent in advance without being asked, or even both. Whilst all of this may sound appealing it can sometimes be a warning sign, as it is a way for them to try and circumvent some of the background checks.
Reduced pool of tenants and short tenancies
Overpricing your property also reduces the pool of good potential tenants to choose from. Most good tenants are reasonably well informed. They know roughly how much the property they are looking at should be given the location and size. Obviously there could be some variation between different properties on the same street due to size and specification, but these differences can be easily worked out from a quick online search. Even if you do secure a great tenant at an inflated rate, they generally won’t stay for long once they find out they are paying a premium. This leads to more turn around costs and further void periods.
The best way to maximise your return
The best way to maximise your return is to position your rental figure at a realistic rate and then ensure that your expenses are managed well. Using a well informed property management agency will ensure that you are not paying for things you shouldn’t be, that you are getting good rates on maintenance and that you are always achieving current market rent. Your rental price should be reviewed annually so should be adjusted to follow the market.