Top 4 reasons you need a regular rental appraisal for your investment property
Charging the right level of rent has always been a balancing act. You need to secure a viable level of income from your property investment while also providing renters with a fair and reasonable pricing structure, so to retain quality tenants through changing markets.
However, in recent years this balance has become even more difficult to achieve. Rapid changes in the West Australian housing market have made it hard for property owners to match fluctuating market conditions and to maximise returns on investment.
This is why expert rental appraisals are so important for property owners, whether you are a first-time property investor or you already have multiple properties in your portfolio.
Having regular rental appraisals completed for your rental property ensures you are optimizing the returns on your investment.
What is a rental appraisal?
A rental appraisal is a process in which an expert analyses your property, your market and your location to ascertain how much rent you should be charging. The expert will provide a detailed report based on their findings so you have actionable insight that will guide your rental strategy.
If you are already renting your property out to tenants, the expert appraisers can look at this and recommend any changes for when the contract is up for renewal. In fact, it is recommended that you get regular appraisals for your property to ensure you are in full alignment with any changes in the market.
What’s included in a rental appraisal?
What exactly does a rental appraisal entail? How do expert appraisers analyse the value of the property and pitch a viable rental rate?
Let’s take a look at some of the key components of the appraisal.
Rental Price Estimate
The expert provides their professional opinion of the marketability of the property and its expected rental range, taking into account the location, size, age and features of the property.
Similar Rented Properties
The expert examines similar properties to your own, either in your local area or in a comparable location. A property management focused agency will typically have on-the-ground Insights across a wide range of locations and property types. They then compare these properties to gain a realistic picture of rental opportunities.
Current Market Trends & Conditions
As part of their report, the expert appraiser looks at the trends, conditions and levels of demand that are influencing the market. They also examine the demographic likely to be interested in renting your property, bringing all this data together to assess the impact on rental returns.
Results-Oriented Marketing Strategies
The appraisal and the subsequent report need to offer actionable insights that you can use to craft your marketing and leasing strategies. This will be a personalised plan with advice on how to reach quality tenants, terms and maximise rental income.
The appraisal will be customised to your specific requirements, but the above gives a good idea of what you can expect from the process.
4 reasons why you should regularly get a rental appraisal for your investment property
Now you know a bit more about what a rental appraisal involves, but you may still have questions about why your strategy really needs this expert insight. After all, you may already have some idea regarding the shape and structure of your strategy, and you might think you don’t need any further input.
However, an expert appraisal can make a significant difference to the way you pitch your property to the market, as well as the returns you receive over the full duration of the tenancy Read on to learn more about why you need an expert appraisal for your rental property in Perth or elsewhere across WA.
1) The WA property market is changing rapidly
The Perth property market has been growing at a rapid rate since the third quarter of 2020, and this growth has continued throughout 2021. Reports show that the number of properties sold or rented out in the region has increased across 2021, making for a fiercely competitive market. This increased competition is driving average rents to ever-higher levels – average rental prices grew by between 10% and 20% in 2021.
The Covid-19 crisis has also played a part here. The pandemic severely disrupted the market in 2020, as property investors and home buyers delayed their transactions. Alarmed, the Australian government reduced interest rates until 2024, with the possibility of extending this move further in the future. All of this has contributed to property and rental markets that are shifting rapidly. As a property investor, you need to make sure that your property is pitched to reflect the current conditions in the market.
It’s almost impossible to do this without expert insight on your side. Unless you have the knowledge, the tools and – perhaps most importantly – the time required to conduct in-depth market research and property appraisal, you may find the process overwhelming. This is where the services of an expert appraiser become invaluable. A regular appraisal is a good idea, building on the insight received from the initial analysis. This is because market conditions can vary significantly from year to year, or even from quarter to quarter.
2) Enable evidence-based decision-making
Your expert appraisal report will provide you with useful and actionable insight that you can use to build your strategy. What’s more, your appraiser will give you valuable guidance on how you should proceed with your rental and investment strategy, effectively giving you a helping hand as you navigate the market. However, the decisions you make are still yours – the power is still with you.
What do we mean by this? In order to get the best out of your investment as a rental property owner, you need to be confident and consistent in your decision-making. These decisions are business-related, after all, and they impact your livelihood and your future prospects. Therefore, there should be no ambiguity or subjectivity when you make strategic calls. Instead, everything you do should be based upon hard evidence and irrefutable data.
An expert appraisal puts this data right at your fingertips and compliments the evidence with an Implementation strategy for existing tenancies or ahead of new tenancies. You’ll be able to make decisions based on the data in the report you receive. You’ll also find yourself able to gain insight into the market and its dynamics – insight that you can use to grow your level of understanding and turn yourself into a better investor in the future.
3) Maximise long-term results of your investment
A rental property really is a long-term investment. While you may eventually decide to sell your property, this is likely to be a long way off in the future – before this point, you need to think about ongoing and long-term returns.
Pitching your rental property to the market and executing tenancy agreements with a nod to rising rents is critical as you seek to achieve these returns. Undercharge for rent, and you are missing out on significant income. These losses will only increase over the full term of the tenancy. Overcharge for rent, and you will damage the relationship you have with your tenants and may find it difficult to fill your property in the future, especially in a declining property market
With an expert appraisal report on your side, it’s far easier to strike this precarious balance. This is a critical step on the way to maximising the full rental life-cycle value of your property.
4) It’s free and there’s no obligation
We’ve already mentioned how decisions relating to your rental property are business decisions, and they should be treated as such. With this in mind, what about cost? You need to eliminate any unnecessary costs from the property investment process, so you may be reluctant to pay for an expert appraisal.
The good news is – you don’t have to. Reputable property appraisers will provide a complimentary service, at no cost to their clients. What’s more, there should be no obligation –to sign up for any services. In short, the whole process should be smooth and streamlined, with no pressure and hassle along the way – and it should not cost you a cent.
What do you need to provide for a rental appraisal?
Before you get started with your expert property appraisal, what do you need to prepare? When you work with the right appraisal experts, the experience will be a simple and easy one. They will take care of most of the details, and you will only have to provide a small amount of information to begin the process.
Generally, you will simply need to provide the address of the investment property as well as your contact details. Then, the expert appraiser and their team will take care of the rest.
All you need to do is sit back and wait for your report, which you can then use to optimise your rental strategy.
Get started today with a free rental appraisal, and optimise your long-term income
Are you ready to reap the benefits of a rental appraisal? Do you want to discover how much of a difference an expert appraisal can make to your rental strategy?