I'm new to this so please excuse my ignorance.
I'm thinking about renting out a house and have a few questions about rent.
1. How do I calculate a fair but reasonable rent?
2. What percentage of the cost of renovations can be added to the rent? e.g. if I install gas ducted heating at a cost of $3,500.
3. Is there a different system to calculate rent for a corporate body, e.g.(Bank, mining company etc.) compared to individuals?
I would work out what all my costs for the property (ALL costs incl. renovations, repairs, fees, rates, mortgage, etc) were for a whole year then divide that figure by 52 (52 weeks in a year). Look at that figure and look at the market surrounding your IP… does that figure seem reasonable compared to similiar properties in your IP's region?
That's the long and short of it. There are computer softward programs available "out there" that can help you with determining rent price etc.
As for what to charge an individual and/or a business entity… I wouldn't treat either different as in the end a HUMAN BEING will be living in the IP not "the business entity" .. if you get me.
Date: July 4, 2007 – 5:23pm
Thanks alot for your enlightened view on rent. I mean with all your knowledge about IP's you must be a millionaire by now.
I thought I put at the top of my forum question- EXCUSE MY IGNORANCE, so forgive me if I got the feeling you where being "smart".As for the individual vs business entity, the entity pays the rent NOT THE INDIVIDUAL!! if you get what I mean. I know for a fact that companies pay more to lease out a property, for staff that come to a rural town to work for the week. So please next time you feel the need to show people how smart you are why don't you audition for Big Brother!!
I forgot to mention that I'm a builder and therefore can build an investment property cheaper than what you could.
So going by your logic about how much I spend on the IP vs rent, I'm at a disadvantage. My rent would have to be lower than other investors. Wouldn't it????? (scratching my head)pyramidParticipant@pyramidJoin Date: 2005Post Count: 64
What are you people smoking?elkamMember@elkamJoin Date: 2006Post Count: 722
I hesitated to answer you in case I got the same treatment as GoldCoastGirl who, from my reading of her post, answered you in good faith and in the spirit of being helpful. However, thinking that you may just have had a bad day today I have decided to venture where angels fear to tread.
I think the best way to set a rental is simply to check what comparable properties are being rented for in your area. Your research, together with your PM's recommendation, should give you a pretty good idea.
I wish it was as simple as dividing all your expenses by 52 as this would make all IP's CF neutral at worst but that is not the reality.
I have never rented to a corporate tenant so can't comment on that.
Hope this helps
Elkaemmajane06Member@emmajane06Join Date: 2007Post Count: 38
Obviously new to the forum and new to communicating nicely with others?
We are all here to help each other, I am sure gold coast girl was acting in good faith when she replied to your post.
And if you were such a good builder you would probably know who to ask for the answer you seek.
WOHA! I was answering in good faith. I was trying to be helpful. Whoops! Please forgive me for wanting to contribute…L.A AussieMember@l.a-aussieJoin Date: 2006Post Count: 1,488
An answer in good faith;
baspet, look at the similar properties in the area near your property, and also ask every property manager in the area as well to give you an estimate. Be careful with that one as they can sometimes over estimate the figure (experience).
Better still to get the list of rentals available from each manager and select the ones similar to yours and do a drive-by to see what they look like.
From my experience the rent won't vary too much from individuals to entities such as Govt bodies etc – they may pay a bit more, and if your property is in an area where they want to rent, you can be sure the managing agents in the area will have some experience in handling them and setting the rent.
GoldCoastGirl; don't let this put you off. Your contribution is enormous and appreciated by many.
Forgive me goldcoast girl
It's just when I seen in your response (52 weeks in a year), HUMAN BEING, and ….if you get my meaning, that you where being condescending towards me. The fact that I'm a builders does mean I know REA and other trades people, but I posted this question to get a different perspective, after all this is an investing forum.
Thanks to elkam and L.A. Aussie for their input, much appreciated. I'm sorry to have offended anyone but it seemed to me that I had to make a scene just to get some clear cut advice. If I post anything in the future I'll be sure to try and make my questions more straight forward.
Everyone have a great day!Mortgage HunterParticipant@mortgage-hunterJoin Date: 2003Post Count: 3,781
You will get the rental for the property that the market is willing to pay. This is regardless of who rents it.
So talk to some local property managers and ask them for a rental appraisal. Get three of them.
You will then be able to work out a figure it will get based on the property and it's improvements and you can decide whether to use one of those managers or manage it yourself.
The fallacy (downfall) of the internet and text based communication. You didn't see my body language and tone of voice as such so you would never have seen that I didn't mean it in any other way than a helpful one. A lesson learnt for everyone – don't read "into" the message.. just read it. Only read "into" the message if there are emoticons etc to make you realise how the person is "speaking" as such.
<br /;)” title=”>;)” class=”bbcode_smiley” /> I'm not being condenscending just trying to help.. my bad!pyramidParticipant@pyramidJoin Date: 2005Post Count: 64
A good way to work out rental values in an area is to pretend to be a potential renter and see what the lowest you can negotiate for similar properties to yours
pyramid, I like your thinking, a bit outside the box, sneaky. Thanks for your input, and if you must know I don't smoke.Mortgage HunterParticipant@mortgage-hunterJoin Date: 2003Post Count: 3,781GoldCoastGirl wrote:The fallacy (downfall) of the internet and text based communication. You didn't see my body language and tone of voice as such so you would never have seen that I didn't mean it in any other way than a helpful one. A lesson learnt for everyone – don't read "into" the message.. just read it. Only read "into" the message if there are emoticons etc to make you realise how the person is "speaking" as such.
<br /;)” title=”>;)” class=”bbcode_smiley” /> I'm not being condenscending just trying to help.. my bad!
Thats a very mature way of handling an attack on yourself.
Good gear mate