Rental Pricing

The difference between making a success of a rental property and perhaps struggling otherwise is often pricing. The ideal rent price will attract good and appropriate tenants, ensure they are likely and able to pay every month and will leave you, as a landlord, a good slice of profit which you can invest elsewhere.

Attracting tenants

Obviously lower prices will attract more tenants and higher prices will attract fewer. You might find there are artificial and psychological barriers to rent pricing in your local area too; many will consider student lets to be low value and a price that is above, say, £100 per week is likely to drawn in only non-students. This is really dependent on your area but you need to make sure that you’re pricing at a par with the market and if you’re not, you need to be able to justify why not.

Covering costs

The first objective must be to cover all your costs as a landlord – that includes interest on mortgages, Landlord Insurance, costs of repairs and things like cleaning charges. At this price your investment starts looking strong; it’s not costing you anything and as your property price, hopefully, rises you’ll be able to tap into some profit.

Profits and losses

Ideally, though, you would like to price at the point where your rent gives you an excess over your costs and you are able to generate some income. In some places, sometimes, however, it’s just not possible and you may feel more comfortable just accepting a loss in the short term. Ultimately you will need to recover a profit eventually and you will need to cover your losses with savings, credit or retained earnings.

A good pricing strategy can be intuitive but the temptation is to always adjust too far. A drop in a couple of pounds a week might give you just that little bit of edge over your competitors but beware: the margins are tight in this business and you’ll need to keep good books if you’re really going to maximise your rental property investment.