It’s safe to say that the success of your property investment will rely heavily on two major factors; capital growth and rental return. A consistent & reliable rental return will pay off in the short term while the capital growth is ultimately the longer term goal. So, does the current rental price for a property affect your future sale price?
We asked Calibre Real Estate’s Co-Founder and Principal, Alice Hagen, for her response to this topical question:
Does Current Rental Return Affect Your Future Sale Price?
“As a rule of thumb, no I don’t believe it does. Buyers are more concerned with the occupancy rate for an investment property more so than what the current yield is. From my experience, approximately 5% of buyers will only take the current rental price as their final basis for purchase whereas most astute investors will also consider the rental cycle that market is in as well as historical rent for that particular property based on supply and demand.”
Having started Calibre with husband, Justin, in the midst of the global financial crisis over 9 years ago, Alice has witnessed over a thousand of property dealings in her time. Read about how Calibre first started & their work within the community.
“In our experience, buyers are more concerned when there is a larger vacancy rate rather than a price drop. Typically, larger vacancy rates can often be attributed to the property being overpriced and therefore unoccupied.
The current rental market is soft due to many factors including historically low interest rates and more tenants entering the property market as first home buyers. This has seen many types of rental properties in Brisbane require price adjustments. This is in order to secure a quality tenant in a short period of time to reduce the days of market for our clients.”
So, with a realistic rental asking price that meets market demand, you can ensure you keep the days on market of your property to a minimum. Less days on market will typically have a more significant impact on your investment than a slight fluctuation in your weekly rental price.
For further information about rental return & how to maximise the income from your investment property :
- 5 Things You Need To Know About Claiming Tax Depreciation on Your Property
- Insider Advice to a Quick Tenancy Turnaround Time
- How To Choose the Right Landlord Insurance For You
- The Best Financial Advice You Need To Buy Your First Home
- How To Buy A House : 9 Things You Need To Know Before Signing