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As much as the unit itself, how much rent is charged for a condo will factor in with how successful it is in drawing and maintaining tenants.
Investing in real estate can be lucrative, particularly when one is afforded the time, know-how, and, of course, the property to use. Among the most common ways where real estate becomes an income generating asset is putting it up for lease, and in major cities like Metro Manila or Metro Cebu, the most viable property for this purpose tend to be condos.
If you have recently bought a condo and it is your first time leasing this type of property, the question of how much to charge would eventually arise. While asking for as much as possible seems like the best way to get the most value out of your property, the more sensible course of action is to settle on a rate that would not alienate your market yet is enough to earn you a respectable amount.
Q: So how much rent should I charge for my condo?
A: There are several considerations to make when deciding on a rental rate for a condo unit, and many experts say; the home’s current value is one. Charging around a maximum of a percent of the unit’s present market price is ideal, but using the services of a professional real estate appraiser to pinpoint the home’s current value helps take into account the cost of upgrades made to the property.
Of course, the rate varies between properties. If your condo happens to be one of the costlier ones due to location and size, it may be in your better interest to charge less than a percent of its value. After all, it can be a little challenging to find a tenant for a Php50 million condo charging Php250,000 to Php300,000 per month.
On the other hand, if your space is one of the more affordable ones in the market, then charging a full percent of its worth is possible. Again, this depends on where the unit is located and the range of features it has, as well as how it compares to other properties of similar qualities.
Know the Rates of Similar Units in the Area or Development
As previously mentioned, you would also need to consider what other owners are charging for renting out their units, as it may become a challenge to find a tenant willing to commit to your terms if what you charge is unreasonable compared to others in your neighborhood.
In addition, you can also look to listing sites like Lamudi for an additional idea on how your rent compares with similar condos. Making these comparisons will give you an idea of the common percentage of property values others use to determine their rate.
Avoid Charging Too High, While Still Ensuring Financial Benefit
Apart from your unit’s current value and the rates of comparable rentals, it is paramount that you also remain mindful of why you are putting your condo up for rent in the first place, and that is to reap some sort of financial benefit. In some cases, particularly properties with large mortgages or construction loans, this may be better realized after the space is sold or when it has gained more equity over time.
Regardless, the right rental rate should at least be able to cover all of the monthly expenses associated with your property, such as monthly mortgage payments, association fees, and repairs and maintenance costs. A rate that is shy of being able to cover this, much more provide you additional income, is indicative that you may have decided on too low a rent for your condo.
Main image via Depositphotos
