As a property owner, evaluating the resale value of a house is a difficult task to complete, however, determining the correct rent of a property is equally challenging considering the separate set of factors to consider. You’re in a constant dilemma of ensuring that the price is low enough to attract occupants and high enough to cover your expenses. Now, the question is whether there’s anything in-between that satisfies both tenants and the landlord?
Quite fortunately, there are several ways to assess the right rent for your property. Better yet, we’ve compiled a simple guide comprising different techniques for calculating the accurate rent for your property!
Let’s get calculating!
Four Simple Ways for Determining the Correct Rent for Your Property in Pakistan
Different landlords have their own unique technique of determining the correct rent for their house. Some of them weigh the amenities while others take the location into consideration. While each situation is entirely different and equally important, there are certain ways both can arrive at rents that are justified with the times. No brainer, right?
Well, in order to make things more convenient for you, here’s our compilation of some ways to accurately determine the rent for your property in Pakistan:
- Take Considerations of Property Costs and Expenses
- Asses the Average Market Rental Values
- Use the Sales Comparison Approach
- Let Occupants Know if You’re Being Flexible
Take Considerations of Property Costs and Expenses
The first and most important thing to consider when determining the correct rent for your property is to take account of overheads. These expenses are also known as variable costs of ownership and they can include maintenance costs, mortgage and insurance premiums, property taxes, and utility bills to name a few. It is quite understandable that property owners want to earn a profit at the end of the day, so until or unless a rent amount doesn’t satisfy these costs, it isn’t rightly set.
As an additional piece of information for homeowners and landlords, the general rule of earning from a rental property is that the household income should comfortably surpass the expenses.
Asses the Average Market Rental Values
The rental value of a property in Pakistan usually depends on two factors: the average market rent trends and locality. These factors stay the same regardless of the amenities and future developments. For instance, a 2-bedroom rental unit in Bahria Town Karachi doesn’t have the same value as the one in Bahria Town Lahore. No matter if the amenities and the developers are the same, any significance or lacking in the location can greatly affect the rental value of a property.
So, most landlords, especially in Pakistan, use measures such as the average market rental values and the exact location of their residential unit to calculate the rent. If you want to explore the average rental brackets in your neighbourhood and the factors that affect it, head to Zameen Area Guides.
Use the Sales Comparison Approach
Calculating rental property value is one of the most crucial steps in drafting a rental agreement. Since the detail is too significant to overlook, landlords often worry about how to calculate the rent for their property. A great solution in this regard is using the Sales Comparison Approach (SCA). Do not let the name scare you, as this is the easiest approach to calculate the rent for a property. There are different approaches that fall under the umbrella of the SCA.
To begin with, most landlords use similar properties in the neighbourhood [that have been recently rented] as a means of comparison to decide the monthly rent for their property. Some landlords also evaluate rent prices based on certain characteristics such as the number of rooms, swimming pool, and parking spaces, to name a few. Also, some landlords take into account the price-per-square-foot/marla calculation. No matter what the parameter is, the comparison is made with the recently rented out properties in the neighbourhood at the centre of everything.
Let Occupants Know if You’re Being Flexible
The key to being a successful landlord is beginning with planning and including flexibility in your plans. Landlords who create a flexible strategy make lasting relations with their tenants.
Let’s say you have strict policies about pets, and you end up with a nearly perfect offer in terms of your needs. The only problem is that your rules read “no pets allowed” and the potential tenant has a pet – you can work it out by being flexible with your rules.
Moreover, if you allow pets on your rental property, this may become a plus over other rental units in the same area. This policy can also enable you to increase the monthly rent. You would be surprised to know that some landlords also ask for an upfront pet deposit while some charge an additional fee in the monthly rent. You can also determine the number of pets allowed on your property and use it as an advantage. You can also specify what type of pet can be kept in your property.
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