When it comes to renting property, whether it is just the one you are looking to rent out or a whole portfolio, knowing the realistic rental income figure is important, as without having a solid idea of what you might achieve, you will never know whether your property empire will turn profit, or just cause heartache and financial ruin.
The rental figure you are likely to achieve is often based on several factors.
Probably the key factor when it comes to rental income, location is the one aspect you really cannot change and therefore the figure you are looking to achieve is heavily influenced by where the property is located and what other like for like properties are achieving in the same area. For example, a 3-bedroom property in North London is going to attract far more per month than a similar property in Wrexham, as rental prices are heavily influence by affordability alongside location.
Different types of property will earn different levels of income, as you cannot expect a studio flat to be priced at the same level as a 5-bedroom family home. Therefore, the type of property will influence the rental income it is likely to achieve, including the number of bedrooms and the facilities that it has to offer.
It goes without saying that if your property is brand new, well-kept and looks amazing, you are going to entertain more money for it, and of course even though the other two factors we mention have the biggest influence, if you are willing to keep the property well kept, you have a better chance of getting a higher income from it.
A good website to check out is the Private Rental Market Statistic section from the Valuations Agency Office, and they released this handy little PDF earlier in 2016, which is also worth a look to understand rental figures across the UK.
Understanding your expected rental income is important to make sure that, as a landlord, you know whether your property is going to not only cover its costs, but also make a profit. If you are renting from an income point of view, i.e. you are looking to make profits from your rental property or properties, then knowing you cover the costs, which could include the mortgage, upkeep costs and insurance is important, as once you know what you need to cover, this can help you to find the right rental figure.
If you are renting through a local lettings agent then they will of course be able to inform you about a realistic rental income amount that your property should attract, but having understanding about this figure is important. It can allow you to really make sure the property is worth renting in its current state and of course, it gives you margin knowledge to know just what the property will rent for, to allow you to decide about whether you stick with the amount, or go lower or higher.
If the property is new to the market then you may decide to set the rent slightly lower than other properties of similar standing to make sure you get a tenant in there quickly, or, if you are in no rush then you may decide to try slightly higher than the average in the hope of landing a tenant that is willing to pay a bit more. Just because there is an average rental income figure in your area does not mean you also need to rent at that amount, but it does make sense that you keep within in the range of the figure to make sure your property is occupied, which is often the most important thing when it comes to generating income from property.