Rent Per Week
Estimating your rent will play an important part in determining whether your investment property is cash flow positive. MID has provided two options to help you work out an estimated rent for your property:.
1. Ask your real estate agent what they expect the rent per week to be. The real estate agent may tell you the current rent of the property or they might be able give you a rate based on their experience in the local area. You may want to adjust this up or down depending on how conservative you want to be in relying on information provided by the real estate agent.
2. Search through property classifieds for your area which lists current rent. This can give an indication of the current market rates. The closer the property is to your investment property in terms of location and property type the more accurate your rent will be.
3. Apply a historical rental yield for the suburb to estimate your rent. From the rental yield you can use our calculator below to work out the rent per week. Click Here to access free rental yield information for your suburb from InvestSMART.
Worked Example 1
A property investor asks her real estate agent about the expected rent of the property. The real estate agent tell her that the property does not current have a tenant but does tell her that from their experience in the area the average rent is $420 per week. Given that this is just an estimate from the real estate agent, the property investor will remain cautious when analysing this property and assumes a rent of $400 instead. After she has bought the property and gets a tenant, she will input the actual rent.
Worked Example 2
An investor looks through the property classifieds to get an indication of the rent he will charge his tenant. Based on all the properties that are similar to his own, the rent is generally around $300 per week. The investor's property however is a newer apartment block and is generally located in a better location. Based on this information, he will assume a higher rent compared to what he has seen in the classifieds and assumes a rent of $330 per week.
Worked Example 3
An investor wants to estimate the rental yield on this investment property in Fairfield, Sydney. After accessing InvestSMART he is given a rental yield of 6% per year. He inputs the rental yield in the calculator which returns him an estimated rent of $375 per week (based on an property value of $325,000). The property is older than most other properties in the area and is not very convieniently located, therefore he assumes a rent of $350 per week instead to be conservative.