A new building in a fantastic location, next to a high value tenant, will cost more to rent than a property of exactly the same size in a less attractive location. Understanding the market benefits, such as location, of a property (and what they are worth to potential tenants) is critical in knowing what is a fair rental rate for your property.
Once you have taken into account all the key factors mentioned above, “a fair market rent is then determined by reviewing recent leasing transactions within the corresponding market”.
“Comparing the subject vacancy against recent transactions and taking in to consideration the factors affecting rental you can then determine a fair asking rental.” Online search engines are a great way to get a sense of current rental rates for similar properties. You can also ask agents or, ideally, other landlords in your area. “Determining a fair market rental of any property is imperative, of course we want to maximise the return for our client”.
However, he also warns: “If you overstate the rent you run the risk of the property sitting on the market for an extended period or, alternatively, you can underlet the property, both of which can decrease the property’s value or return to the owner.”