How much rent should you ask for as a Landlord?
You bought a property that you want to rent out. But then you wonder, “How much rent should I ask for?” This can be difficult because asking for too much will mean that you’ll be unable to rent your property out. But if you ask for too little, you will miss out on a rather significant amount of money.
But no worries! We will give you some ways to determine your monthly rent.
The first way is to do some research on what the average rent asked for is in your neighbourhood. So check out the prices of the neighbouring or surrounding properties and compare them with your property. To rent out your property, make sure that your rental price is similar to or will not be higher than other properties. If you don’t do research and end up setting a price too high, it will be very hard to rent out your property.
Maybe you aren’t willing to choose the method above because your property is bigger or has gone through a large renovation. If that’s the case, then the following method may fit you better.
An easy way to calculate your rent is to choose how long you want to get your return on investment.
For instance, you have paid RM 600,000 for a property and want to earn it back in 10 years. Just divide 600,000 by 120. This means you want to ask RM 5000/month.
Why is this a good method? Simple, you have a goal. But of course, always see to it that the price is realistic. If similar properties will cost much less than that, you will not be able to rent your property out.
The last way to determine how much rent you should ask is a percentage of your home’s market value. This means you ask a certain percentage of the properties value.
Normally, this percentage sits between 0.8% en 1.1%. For instance, you paid RM650,000 for your property. This means you will ask RM5200 rental per month.