Hi, I’m Heather Jopson from Beyond Property Management, and I’m here with my frequently asked question today: “How do we appraise market rent for a property?”.
And the answer to that is we put ourselves in the tenant shoes. At the end of the day, we don’t choose market price, the client doesn’t choose market price. It’s actually the tenants that do that. It’s supply and demand. That’s what dictates the value of anything, ever, is always supply and demand, what are people prepared to pay for a product?
So, when we’re appraising a property and setting a price in the rental market, it’s going to be based on if I were a tenant in the market today, what else would I have to choose from that is similar to this home? Or if I had a particular budget to spend, what else could I get for my money? And how does that compare to the property in question, to the subject property? So that’s actually how we appraise market rent.
A lot of owners when it comes to renewal time will assume that there’s a set percentage or does it goes with CPI. Or, you know “my rates have gone up”, or “I’ve had a lot of maintenance this year”. But those things actually aren’t related to your tenants out there looking at properties, they don’t know that. They don’t know what your background costs are. They just look at your property compared to another one. What’s better value for money? Where do I see myself living and what am I prepared to pay?
So, setting market price is always about putting yourself in the tenant shoes. It’s about looking at supply and demand. And then having a look at what your property offers in comparison and setting the price accordingly. Going to market and always looking to get the absolute best result. Our job is to not just get a tenant for the property, but to get the best tenant for the property, at the best price that the current market will offer. So that’s what we’re looking at when we’re doing an appraisal. We’re good at it. I enjoy appraising properties. I love that analytical side of what we do.
So, if ever you’ve got any questions or want a second opinion on a property that maybe you’ve got under management with someone else, I’m happy to jump online, have a look at what I can see and give my thoughts. So, I hope that’s helpful on how a property is appraised in the rental market. Thanks so much.