Monday, March 19, 2012

How much to spend on rent?

Renting a house can be a killer. When you rent a place, you are actually paying for the landlord's loan service plus interest plus maintenance fees plus stamp duties plus appreciation value plus profits plus many pluses.

In order to understand what is a reasonable price to look out for when renting a flat, you got to check the property price or value in the region.

If the last know transaction of a house sold next door is $200,000, then the price of the flat you are going to rent should not vary too much.



Most landlords would consider a 5% to 9% P.A rental gain based on the property's current market value. So for instance, if the property is worth $500,000, the rent should be somewhere from $2500/month to $3750/month.

What makes a rent hit skyrocket is the furnishing done. A fully furnished house with all the facilities in place, the rent can be 20% to 30% more than one that is not. Therefore you got to consider, how much of the facilities do you actually use. Remember, you are renting the furniture too.

It is advisable not to spend more than 35% of your income to your rent. In fact, it is good to use less than 25% of your income in rental. Of course, the best advise would be, if you could afford, buy, not rent.

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