How do you set your rent – research for seminar

by Kirsty McGregor

9:16 AM, 24th November 2013
About 7 years ago

How do you set your rent – research for seminar

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How do you set your rent – research for seminar

I am researching how Landlords and letting agents look at the best way to market a particular property, and make it stand out from the rest to achieve a higher rent. This is for a seminar I am presenting at the Landlord & Letting Show next week.

So far I have been really surprised at the range of rents within a very small area….even taking away the extremes there was a 42.5% difference in rental price on the same postcode area, for the same type/size of apartment.

The seminar is Wednesday and I would be most grateful if any one can assist by posting how you set your rents, or are you taking the equivalent LHA price.

Many thanksresearch



Comments

Peter Hindley

9:34 AM, 24th November 2013
About 7 years ago

Hi Kirsty
As I use a fully managed service I tend to follow the Letting Agents advice but they always ask what I want first. I use the LHA rent as a guide and aim to achieve 10% over that as I am doing family lets in small Victorian terraces.

This is classic LHA territory although I have working families as tenants. Obviously I don't have to make adjustments for "upmarket" tenants.

A friend of mine asks a LA and then takes £50pm off their recommendation to avoid voids.

Good luck with your talk.

Regards
Peter

Justin Selig

9:41 AM, 24th November 2013
About 7 years ago

I was taught a long time ago to use 5% of the market price of the property and then round it up. If the other properties in the area are higher raise your price, if lower negotiate.
We keep our properties in good condition, clean, white goods but basic.
I expect the tenant to be able to supply all the internal furnishings and kitchen equipment. If by the time they want to live independently they cannot afford the basics for themselves what chance have I got that they will look after my property when they have no investment in it?

Mark Alexander

10:21 AM, 24th November 2013
About 7 years ago

Hi Kirsty

42.5% is quite a wide price margin but this is probably reflected in property sale values too.

When people look to buy or rent they generally have an area in mind and look at a range of properties based on affordability. They tend to find these via the Rightmove and Zoopla portals.

They then arrange to view a selection of properties based on their budgets and choose those which they "get a good feel" from. People rarely get exactly what they want and compromises have to be made.

Landlords like to think they set the rent but the reality is that rents are set by market conditions. I've heard landlords say that if their cost of borrowing rises they will have to put their tenants rents up. It doesn't work that way though because tenants have no regard for their landlords finances, only their own. If a property is unaffordable tenants will look elsewhere. That's the beauty of renting, there are far less ties compared to home ownership.

The difference between a tenant and a purchaser is that a tenant has a budget for a property to live in but will very rarely have a budget to improve a property. Therefore, they will be looking for the nicest property their budgets will stretch to.

I have found that the best way to increase demand is to advertise my properties slightly below the price of others in the area but to make them nicer. I get more viewings that way but tenants do look at the slightly more expensive properties too. When they do this they realise that my property is nicer and costs less. I then have several people wanting to rent my property. They know that if they don't get mine they will end up paying more for something not quite so nice so their competitive spirit is ignited. This gives me the ability to pick and choose my tenants. When this happens I explain that I have several interested parties and that I think I may have under-priced my property. Prospective tenants will never admit that I am right but they know the reality and they have already decided they want my property. Sometimes they offer higher rent than the asking price.

My philosophy is that I prefer to lose £25 to £50 a month for the first 6 to 12 months as opposed to getting a void period. I also like having the ability to pick and choose my tenants based on their credentials, one of which is how long they are likely to want to stay. I will do pretty much whatever it takes to minimise tenant changeovers and void periods.

I look upon the first 6 to 12 months of a new tenants occupation of my property as an opportunity to prove that I am the best landlord they will ever find. When I have a chat with them at the end of the first year and explain that I need to increase my rents to the market value it's not a difficult conversation. They know they have been paying less than market value for a property which is the nicer than others costing more and they also know I'm a good landlord. Therefore, very few of my tenants move out when I increase rents.

I hope this helps and good luck with your talk.
.

10:39 AM, 24th November 2013
About 7 years ago

It surely all boils down to research and due diligence?

Spend time visiting other similar properties in the area to see how your property sits in the marketplace alongside the competition.

I have found a huge difference in the standard of similar property types all charging a similar rent.

For example, in Guildford I was charging £650 for a high quality room, and then found that someone else was charging £700 pcm for a lower quality room - and achieving it!

As for standing out in the market place - I believe in tapping in to a recently discovered phenomenon known as "anticipation happiness".

http://www.propertytribes.com/leveraging-anticipation-happiness-your-property-marketing-t-3802.html#pid3802

If you can put yourself in your tenants shoes, then you will understand their needs.

For instance, I don't have any children, so I don't think like a "mother", so I have to imagine what a family's needs are.

Little touches make a big difference. Seth Godin calls this "creating a purple cow" - something that stand out from the crowd.

Ed Atkinson

13:23 PM, 24th November 2013
About 7 years ago

We put the postcode and number of bedrooms in Rightmove, specify flat/house and tick 'let properties'. Usually several pages are listed and we go straight to the middle page. Then move up and down trying to find equivalent properties as regards quality, room size, parking etc. We advertise at the market rent using Discount Lettings but try to stand out by showing as prominently as possible that there are no extra fees at all - refs, credit checks, tenancy agreements , all free. We use a jpg image along with the photos with a 'Guarantee no fees' message.

We've never had voids so far with this strategy.

13:31 PM, 24th November 2013
About 7 years ago

There is another one-liner which you can add to your adverts to potentially double the interest in your property. To find out what it is, and for many more tips on how to find the perfect tenant, check out the link below.
.

Ian Ringrose

15:31 PM, 24th November 2013
About 7 years ago

In some areas the LHA rate is more than the “professional” rent, in these area a rundown property that is rented to someone on benefits can command more rent then a very nice property that is rented to someone in a good job.

Being within the catchment for a give school can make a big different, and unless you know the catchment areas you would never guest them looking at a map.

Some postcodes just don’t make sense, as it is very hard to travel between roads that are within them. Having a nice walk to the station that feels safe can also be a very big factor.

Sam Cowen

9:45 AM, 25th November 2013
About 7 years ago

If you're renting out properties by the room, the best place to get market rental data is on SpareRoom. You can download the monthly rental index which combines data across the last three months and gives you an average for every post town in the country, for a double room inclusive of bills, as well as an indication of relative demand by area. http://www.spareroom.co.uk/rentalindex

For more detailed price information search for a named area or postcode in the main search on SpareRoom for Rooms Wanted, and you'll see a link on the right hand side for average room rents in this area, which gives you a range you can then price your room in, for every postcode and for single as well as double rooms, exclusive as well as inclusive of bills. Hope that helps.

Sian Wyatt

12:59 PM, 25th November 2013
About 7 years ago

I check the average rents advertised on rightmove and the LA rates. I have a steady stream of enquiries from friends so don't actually ever advertise any more. I set the rentdepending on the above and who I want to rent to - if it someone I know is on benefits I set it to the LA rates, sometimes plus a small amount, if they can afford more then nearer the market average, but usually a little below. If I have voids then usually it is only by choice, so I can do a bit of work. Seems to work...

Kirsty McGregor

14:36 PM, 25th November 2013
About 7 years ago

Wow all fabulous comments & really useful thanks. Just as I thought actually and helps my seminar to be able to quote 'real landlords' (I'll not use names though, don't worry).
If anyone's interested, I'll post the eventual seminar slides on Thursday on my blog on my website http://www.rental-ratings.co.uk . Thanks again & keep them coming, I'll probably still be refining the content on Tuesday evening 🙂


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