Rental Guide: Part Two
Getting your costing right and settling on what rent to charge will be one of your greatest challenges.
You need to strike a balance between charging enough to make the venture worthwhile and not charging so much that you price yourself out of the market.
How much you can charge (and more importantly, how much people are willing to pay!) will vary not only on the location, type of property and season but things like the weather and the general economic climate – factors which are unfortunately outside your control.
There are a few things that you need to bear in mind though:
Overheads – How are you going to handle the variable costs of heating bills, water, air conditioning, laundry, cleaning etc? Don’t present your tenants with hidden costs at the end of their stay because you didn’t budget correctly, it won’t go down well!
Profit – You need to sit down and thoroughly work out your costing BEFORE you take in your first tenant. In order to know how much you’re going to need to charge you need to know your outgoings and what you would need to take to break even. There’s no point renting out your property just to end up losing money.
Price Point – Short stay rental accommodation is only lucrative if it has tenants for the majority of the year. In order to attract tenants in an oversaturated market, both in peak-season and off-season, you can’t be too expensive. At the same time you can’t be too cheap either. Not only will you lose money if you under price your property but people (particularly those booking online or by phone) will begin to question the quality of the accommodation you’re offering.
Promotions – Although this isn’t the most essential part of pricing it is something important to consider, and something which can attract tenants who might otherwise pass you by. Are you going to offer promotions for specific times of the year? Or discounts because of last minute cancelations? Are you going to charge more around specific events? It always pays to be aware of the special events, just think of how much rental properties cost around Wimbledon during the Tennis!
In Part Three of our rental guide we will tackle the murky world of marketing!