It pays to go beyond the data
When it comes to successful property investing, testing the rental market can be the difference between a good return and a great one. Many investors rely solely on market data or property manager recommendations when it comes to pricing the rent on an investment, but this can often lead to undervalued rent and lost income.
We always advise our clients to take the digital data with a grain of salt. Having an expert on your side who knows the trends in the region helps you get a greater understanding of positioning your rental property on the market.
The gap between market data and market reality
There’s no question that market data plays a valuable role in guiding rental pricing decisions. However, data often reflects past performance not current potential. In dynamic areas like Newcastle and the Central Coast, rental demand can shift rapidly due to factors like infrastructure upgrades, government policy changes or vacancy rates.
Relying solely on static figures can mean you’re missing out.
The importance of testing the market
A proactive property manager won’t just take a conservative approach to pricing your property – they’ll be willing to test the waters. That means setting rental prices that are informed by data but responsive to what’s happening on the ground.
This is something we see firsthand and we guide our clients on (find out more about our investment services here). A recent property we purchased was appraised at $800–$850 per week. But with a strong pulse on the market, we encouraged the managing agent to list at $900. The property was leased almost immediately.
Testing the market, within reason, can lead to significantly better outcomes for property owners.
The risks of overpricing
That said, testing the market doesn’t mean overstepping it. Overpriced rentals can sit vacant for weeks, ultimately costing more in lost rent than they might have gained. The key is finding the balance based on current data and well-informed market knowledge.
Why regular independent rental reviews matter
Just because you’re receiving an annual rent increase doesn’t mean your property is performing at its best. Many investors assume their rent is at market value but if you haven’t had an independent review recently, you could be undercharging without realising it.
We recommend all investment property owners request a rental review at least every 12 months. Markets evolve and without regular appraisals, you could be losing potential profits.
Take a proactive approach to your investment
The rental market is not set-and-forget. To maximise your return stay informed, question whether your current rent reflects true market value, and work with professionals who know the local landscape.
If you’re considering purchasing property, book a free consultation with Kylie and the team to discuss your options.
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