Searching for a property to invest in is one thing. Figuring how much rent to charge is a completely different ball game. When you’ve bought your property, you’ll face a tough question – what should you set as an appropriate rent?
Charge too much, and it’ll put tenants off. Charge too little, and you will lose out on a great yield. It’s a fine balancing act, and it ultimately rests on what the space has to offer. But there are other factors at play too.
Analyse what you have
Start by adding all of the conveniences, utilities and physical attributes that make your space what it is.
What is the floor plan of the property? What furnishings are included in the property? Is the property filled with natural light? Sturdy, modern furniture is essential. Tenants like to have a top-tier apartment; they’ll pay more for a beautiful décor. Equally, they often prefer neutral tones to bright colours and patterns, as they’ll like to make your space their own home. Simple changes between developments – such as a statement chair – can give the flat a unique look.
Elsewhere, consider the amenities. Does it have a gym on-site? a pool? a concierge desk? Add them to your list of sellable features. That’s how property value accrues. Properties like Uptown and Oxygen all have on-site gyms and concierges (with some even having cinema rooms) allowing landlords to charge a higher rent for premium services and conveniences.
Height matters too. Tenants generally prefer to be higher because there’s less chance of being overlooked. An actual cityscape view, instead of staring directly into a flat opposite, makes apartments on the top floors worth more. Axis Tower is a great example of this, offering surreal panoramic views across the entire of Manchester and beyond. Tenants will be much more likely to pay a premium price if their morning starts with views this incredible.
Compare the value of property nearby
Once you have compiled a list of your property’s characteristics, it’s time to weigh it against other, similar spaces a few minutes’ distance away.
Average rental prices give a snapshot of the bar you may be aiming for. Find comparative properties and divide their rental value by the number of examples. Back it up with local statistics, like the £1,271 p/cm Manchester figure from December 2018.
However, don’t take this on face value. Anyone can research Rightmove, Zoopla and other sites, but it takes a trained eye to realise when their ads are covering something up. A photo may be cropped, for instance, to blot out a construction project beyond the window. Get expert advice on separate honest comparisons vs. those that are hiding their faults.
Location is a huge influence on the property value too – particularly for off-plan builds. Even a quarter mile from the city centre can make all the difference. If the space is in close proximity to shops, transport links and stylish venues, you can raise the rent further above average. Uptown currently sits right in the heart of the city just a 3 minute walk from Victoria station. With convenience like that, and giving tenants on average 20% more space than other apartments in the area, landlords can afford to charge a higher premium on rental prices.
Get the timing right
Finally, we should mention that the time at which you open the property for tenants can move the price up or down.
Why? It’s due to university semesters. Whether students are settling into their first job or moving from halls to private accommodation, they want to move in quickly. For this reason, tenancies that launch from July to October can charge a greater amount as demand will be at its peak.
When it isn’t, rents have a small chance of being renegotiated. For larger cities like Manchester, that’s rarely a concern. Demand remains relatively steady, so your asking price is subsequently secured.