How establish tenant demand

by Readers Question

9:23 AM, 7th January 2014
About 7 years ago

How establish tenant demand

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How establish tenant demand

I live in North London (Enfield) and want to buy a 1 bed flat for renting out. Flats in my area are priced around £180K to £230K to buy and rent from £850 to £1,150 per month.

Everyone and his brother that I talk to (not all in property) tell me that the rental demand is very strong but how can I really test this?

As a novice I went to Rightmove and searched for flats, 1 bed within a quarter mile of the station and found around 15 but only 3 were recently rented. The rest remained available and had been listed on the site for several weeks previously.

Should I conclude from this that the rental demand is weak?

A side point is that Enfield is seeing lots of new developments (like everywhere) going up and I was wondering if this could be hitting demand as well as government helping with deposits pushing renters to now buy. I just did not want to buy at what are highs in the market and then get stuck not renting the flat fora year at a good rent.

The area I will rent in is Enfield Town, a good middle class area.

Many thanks for any thoughts. How establish tenant demand

Regards

Marcus


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Comments

Mark Alexander

9:28 AM, 7th January 2014
About 7 years ago

Hi Marcus

A very common method to establish tenant demand is to place a free advert on Gumtree or in the local newspaper.

If you get a lot of calls then demand is good, if not the rental income you are looking to charge for the property is over-priced. It is highly unusual for a property not to have demand if it is priced at the right level.Price generally guides demand.

I recommend discussing the above with vendors you are considering buying from and asking them if you can advertise their property and arrange viewings on the basis that if you can easily let the property you intend to buy it.

Be honest with your prospective tenants when they call too. Explain the true position, that way nobody will feel they have had their time wasted.

I would also recommend talking to letting agents. The question to ask them is what would they buy if they had your budget and why. If you ask them whether a certain property will let they will instantly go into sales mode and convince you to let it through them. be cautious of biased advice, especially if the agents you talk to also have properties to sell.

You could also consider under-pricing to create high demand, short-listing the very best prospective tenancies and then consider a bidding process.
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Industry Observer

9:51 AM, 7th January 2014
About 7 years ago

If a property is £200K and generates a 6% NET yield then that is £1000 pcm or £12K a year, so the price especially in the alternate universe that passes as the London market I would have thought isn't far out. Nut I am no expert on the London market at all.

I assume Mark means if you advertise and get a lot of calls then the property for rent or sale is under priced as an overpriced property for sale or rent surely attracts less calls?

This actually was going to be my naughty suggestion - get it onto Right Move and advertise it at around £75 - £100 less than the most easily achieved rent and see how many calls you get. Those that do call you'll have to blame the portal or paper for a typo and geting figures in the wrong sequence!!

Marcus Taylor

12:06 PM, 7th January 2014
About 7 years ago

Reply to the comment left by "Mark Alexander" at "07/01/2014 - 09:28":

Hi Mark,

Appreciate your advice and will definitely try Gumtree this week. Hopefully I should get plenty of calls and therefore this should give me some peace of mind that potential tenants should be plentiful.

All the best, Marcus


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