How Much Rent Should I Charge for My Rental Property?

Recently I bumped into my neighbour Gareth at the Karori shops.

Knowing I work in property management, he asked me a question I hear all the time:

“My tenants have just given notice. Should I put the rent up or keep it the same?”

It’s a simple question, but one that’s become much harder to answer in today’s rental market.

This article is based on the questions we’re most often asked by landlords throughout the Wellington region and the advice we provide during rental appraisals.

Contents

• Why most landlords start with the wrong question
• Why pricing matters more than ever
• What makes a property stand out?
• Why you shouldn’t rely on last year’s rent
• What do we consider when preparing a rental appraisal?
• Is a professional rental appraisal worth it?
• So, what did I tell Gareth?

Most landlords start with the wrong question

When it’s time to advertise a property, many landlords ask: “What is my property worth?”

It’s a reasonable question, but in the current market, it’s not the best place to start.

A better question is:

“What tenant am I trying to attract, and what other properties are they comparing mine with?”

That’s because tenants aren’t comparing your property with what it rented for last year. They’re comparing it with the other homes available today.

If similar properties are offering better features or a lower asking rent, that’s what influences a tenant’s decision.

Why pricing matters more than ever

The Wellington rental market has changed significantly over the past couple of years.

Tenants have more choice than they did previously, which means they’re taking the time to compare properties before making a decision.

If your asking rent is too high, even by a relatively small amount, you may receive fewer enquiries, fewer applications and longer vacancy periods.

While it can be tempting to hold out for another $20 or $30 a week, it’s worth considering what that decision could cost if your property sits vacant for several weeks.

In many cases, the lost rent from an extended vacancy is far greater than the extra weekly rent you were hoping to achieve.

What makes a property stand out?

Not every property competes on price alone.

If your property offers something that’s difficult to find, such as secure garaging, a home office, excellent sun, a modern renovation, great school zoning or a highly sought-after location, it may justify a higher asking rent.

However, if your property is similar to others currently on the market, your biggest competitive advantages are usually:

• Pricing the property correctly.
• Presenting it well with high-quality photos.
• Marketing it effectively.
• Making it easy for prospective tenants to view.

Often it’s the combination of these factors, rather than one single feature, that attracts the strongest applicants.

Don’t rely on last year’s rent

One of the biggest mistakes landlords make is assuming their property should achieve more simply because it did last year.

Rental values don’t move in a straight line.

They change depending on supply, demand, seasonal trends and the number of comparable properties available at the time.

That’s why every new tenancy should begin with a fresh assessment of the current market, rather than relying on historical rent.

Is a professional rental appraisal worth it?

In almost every case, yes.

A professional rental appraisal looks beyond what a property achieved previously. It considers the current market, competing listings, tenant demand and the features that make your property more or less competitive.

Most property managers provide rental appraisals at no cost, and getting the pricing right from the outset can save significantly more than trying to recover lost time after a property has sat vacant.

What do we consider when preparing a rental appraisal?

A rental appraisal is much more than looking at what the property rented for previously or checking a few online listings.

When we prepare a rental appraisal, we look at a range of factors, including:

1. Comparable rental properties
We look at properties that are currently available, as well as those that have recently been rented. This helps us understand what tenants are choosing and where your property sits in the current market.

2. Tenant demand
Not all properties attract the same level of interest. Factors such as location, school zones, parking, pet friendliness, home offices and outdoor living can all influence demand and the type of tenant your property is likely to attract.

3. Your property’s strengths and weaknesses
Every property has something that makes it stand out. It may be a modern kitchen, excellent sun, a garage, or a sought-after location. Equally, there may be factors that make it less competitive than similar homes. Understanding both helps us recommend a realistic asking rent.

4. Current market conditions
The rental market is constantly changing. Supply, demand and seasonal trends all influence how much tenants are willing to pay. A property that attracted multiple applications six months ago may require a different pricing strategy today.

5. The cost of vacancy
Sometimes achieving the highest possible weekly rent isn’t the best financial outcome.

A property that’s priced competitively and rented quickly will often deliver a better overall return than one that sits vacant for several weeks while chasing a higher asking rent.

Our goal is to recommend a rent that attracts quality tenants within a reasonable timeframe while helping you maximise your return over the long term.

So, what did I tell Gareth?

Standing outside Woolworths wasn’t the right place to work out a rental appraisal.

Every property is different, and every pricing recommendation should be based on current market evidence.

So my answer was simple.

“Give me a call on Monday and we’ll work it out properly.”

Getting the rent right isn’t about asking the highest possible price. It’s about understanding the market you’re advertising into and positioning your property to attract the right tenant.

If you’re unsure where that balance sits, we’d be happy to help with an obligation-free rental appraisal and talk you through our recommendations.

Written by Lisa Nimmo
Property Consultant and Business Development Manager | Manage My Rental

Lisa Nimmo works with landlords throughout Wellington, Lower Hutt, Upper Hutt and Porirua, providing rental appraisals and practical advice to help owners maximise returns, minimise risk and protect their investment properties.

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