The hidden costs of higher rent
If a bit of rent is good, then more rent is better – right? Well, not always.
Landlords understandably want to maximise their investment but those who seek rents priced higher than the market face significant risks.
The least harmful of these is a period of vacancy in which they learn the hard way that their expectations were not reasonable, and drop the rent accordingly. Each week the property is vacant is equivalent to roughly two per cent of annual income – which quickly adds up.
Worse, they could attract a tenant who is prepared to pay more because they keep getting knocked back elsewhere courtesy of their poor record – and who proceeds to default on rent and/or trash the home.
Criminals who hope to use the home as a clandestine drug laboratory or grow house might also apply to rent an overpriced home, sometimes even offering rent in cash or in advance to seal the deal with the unwary landlord.
The other group which might be prepared to pay over the odds is new renters. While they may turn out well initially, they are unlikely to stay long term if they can find a better deal once they have a good rental record.
The fashionista saying that “less is more” can sometimes apply to rent!