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Rental investment

How to set the rent for your rental investment?

Do you own a property that you have rented or that you want to rent? Above all, your main objective is to benefit from the highest possible rental yield, which is completely normal. However, it should be borne in mind that it is essential to estimate the correct monthly rent. How to do it? This is what we explain to you in this article.

Rental investment: the criteria to consider when making an estimate of the rent

Several elements must be taken into account to make a fair estimate of the rent, i.e. neither too low nor too high.

The type of property

The rent will not be the same for a house as for an apartment. Likewise, you will not offer the same monthly amount for a 60 square meters as for a 20 square meters. Finally, if the property you are renting is furnished, this will have an impact on the monthly rent which will then be higher. As you will have understood, the type of property is the first criterion to take into account when determining the amount of rent that you will ask your future tenants.

The location of the property

The geographical location of the property is also a key element in calculating the monthly rent. If you offer a 50 square meter apartment in the heart of Paris, the fixed rent will not be the same as for a similar apartment located in Brest, for example, where the price per square meter is much lower. Likewise, the proximity to shops, parks and others is important. The rent for a property located in an isolated village will not be as high as that of a property located in the city center.Note: after the cancellation of the rent control system (put in place in 2015 in the French capital) by the Paris Administrative Court, it will be reinstated in autumn 2018 thanks to the ELAN law (evolution of housing, planning and digital technology — housing law 2018). 

The condition of the property

Obviously, if you offer a property that is a bit “outdated”, poorly insulated or still very humid, this will have an impact on the rent you set. On the other hand, for a clean, recently renovated, well-insulated, bright and other property, you can ask for a higher rent. The exterior of the property also counts: a parking space, a cellar, an interior courtyard... These are assets that can make it possible to set a higher rent. You simply have to be able to judge your property objectively, which is not always easy for owners.

Common areas

Common areas are also important in determining the amount of rent. For an apartment, the presence of an elevator like that of a caretaker will make it possible to ask for a higher rent.

Techniques for properly fixing the amount of your rent

Have you reviewed the criteria mentioned above and noted the good and bad points of your property? To ensure that you are offering a truly fair rent, you can use a variety of techniques such as the following.

Compare to better estimate the rent

You are renting an apartment of 60 square meters in full 16E arrondissement of Paris? Is your 90 square meter house in the heart of the Breton countryside for rent? What if you inquired about rent amounts in the same area and for the same property category? Comparing to better estimate is one of the methods to adopt to have a better idea of the rent to be offered. This makes it possible to set an amount in accordance with market trends and reality.

Determine the amount yourself

You can completely choose to set yourself the amount of rent you want to charge your tenants. But beware, if you are not familiar with the real estate sector, it can be risky. For what reasons? On the one hand, you could set the rent too low. This would attract tenants or, on the contrary, inspire their distrust. Also, it would not be profitable for you. On the other hand, you could set the rent too high. In this case, you may have trouble finding tenants, so your home would remain empty and you would not receive any income.

Call on a professional

To fix the amount of your rent as accurately as possible, you can also ask for the intervention of an expert in the sector. Thanks to his perfect knowledge of the market, he will be able to determine a monthly rent in accordance with the sector, the services of the property and others.

Beware of rent ceilings!

As explained by ANAH (National Housing Agency), “the rent ceilings that you must apply are maximum rates defined at the national level. They are then adapted locally according to market prices. [They] are in euros per square meter of so-called “fiscal” living space, charges not included. The “fiscal” living area is the living area, to which is added half of the area of the annexes (within the limit of 8 m2). Rent ceilings are revised every year.”Do you have or are you going to make a rental investment? As you can see, determining the amount of rent is not easy. Study the real estate market carefully and take into account all the criteria we have mentioned. You will thus set an adequate rent that you can justify to the tenants if necessary. You can also, if you prefer, entrust the estimation of the amount of rent to a real estate agent. In any case, remember the three “J” of a good rent: fair, justified and justifiable.

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