How to Set Rental Fees on a New Property
The mode of rental for each unit of a new building is important to make sure the operation of the entire building is not going to flop financially in the long run. Whether you’re going to go for net or gross rental, it is important to calculate everything properly. Rent strategies are important to ensure that you get your intended returns. You have to determine rent rates first before you ever get into a negotiation with any lessee.
Gross rental is a comprehensive one-time payment of rent which covers everything including operating costs. Should the landlord go for this method, he has to determine the costs carefully. He has to have a good grasp of the building expenses before imposing the exact amount. The net rental, on the other hand, is just rent plus operating costs to be paid by the tenant. Provided that you have a good grasp of your entire building’s operation, determining this won’t be difficult at all.
Moreover, landlords normally give tenants incentives as part of their occupancy. You have to work this out as well as part of your operating costs in order to get a real estimate of the exact amount you’re going to get at the end of each month, or each year. This additional expense will have a presence on your operation for sometime.
If your property is managed properly, you will have a steady recurring income every month. However, you have to keep track of your income in proportion to your operating cost at the end of each month. Low vacancy rates also guarantee you very good monthly incomes.
Also, don’t forget to hire a reliable property manager, if ever you’re going to. He has to responsible enough to give you an exceptional performance, as well as hand out reports containing the results that you want to hear.