How Much Do You Need to Charge for Rent in Cambodia?
Getting your own real estate property to rent out is one of the best moves you can make. A property that gives you a great rental return can help increase your profit monthly, thus allowing you more financial freedom. As a landlord, setting the right rental price for your property can be a tricky task. If you price it too high, you may struggle to find tenants and if it is priced too low, you may be just leaving money on the table.
To calculate the right rent for your property, you need to multiply a percentage of the property value to the purchase price. The product will then be the monthly rental price. The computation looks like this:
Rental price = Purchase price x A percent of the property value
The percentage of property value depends on average rental prices in the market, as well as other factors like the type of property you have. In short, you need to consider these factors first, but in general, you can multiply the purchase price to 1%. Using this number, you can get a competitive rental price for your property, although this can be higher than what the rental market shows.
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For example, if you bought a property for $250,000 and multiplied it to 1%, the monthly rental price should be $2,500. However, depending on the property type, amenities, and location, this is a higher rental price than most Cambodians will spend for accommodation.
In this guide, we will cover the key factors to consider when determining the right rental price for your property:
Steps to calculate the right rent for your property
There are many factors you need to consider to determine if you need to set a higher or lower rental price. To make it easier for you, here are the top things you need to do to get an accurate rental price:
Conduct a rental market analysis
Similar to when you were researching the market for the right property to buy, you need to do the same before setting a rental price. This will help you a lot in ensuring that the rent you set is competitive for the property you have, alongside the amenities you offer. To conduct a rental market analysis, make sure to check on the following:
- Number of bathrooms and bedrooms
- Square footage
- Floor plan
- Construction/Property age
Factor in amenities and property characteristics
One of the musts to consider is the amenities that your properties offer. Generally, this is the common inclusion in the specific development, condominium, or neighborhood you buy the property in. For example, if you buy a condominium, the common amenities could be a pool, elevator, and more. You also need to factor in the features and condition of your property to determine the right rental price.
You can increase or decrease the rental price depending on the features, condition, and amenities of your property. While there’s no specific guide on what amenities or features can lessen or increase your rental price, here are some of the amenities that generally allows you to put a higher rent:
- Has parking
Besides that, here are some of the factors that can decrease the rent:
- No security
- No community amenities
- No parking
- Walkup building
Set rental inclusions
Renters will always check what the inclusions are in the property they want to rent. In short, if you decide to include utilities in the rental price, then it could be higher than market average. However, property owners and property management companies often do not include utilities in the rent considering this could be tedious. Moreover, utilities can be higher or lower each month so this can cut through your profits. However, you can include it in your lease if it fits your marketing strategy and budget.
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Check operating expenses
While you must consider the above factors to ensure you’re making a profit with your rental property, you also need to ensure that it covers your operating expenses. This means the rent should be enough to pay for the following:
- Maintenance and repair cost
- Vacancy costs in case of tenant turnover
- At least a 5% gross profit in the rental
Determine showing activity
Once you’ve determined the right rental charge, the next thing to do is post the listing and check if potential renters are interested in seeing your property. The more inquiries and viewings you have, the more you know that the rental price you set is competitive given the property you have in that market.
Monitor the rental market
After carefully setting the right rental price for your property, whether you already have a tenant or not, your duties as an investor are not yet over. You need to make sure that you’re constantly monitoring the rental market for charges on the prices for properties similar to yours. If you do, you can increase or decrease the rent accordingly so your property remains to be competitive in the market.
Don’t have time to do all these steps? Request a valuation today and price your property to lease!