A real estate investor is not just an investor – they wear many hats including a marketer, designer, accountant, landlord, and many other roles. When it comes to marketing, target marketing is important with just about everything and everywhere. So investors, ask yourself, do you target the right type of tenant with your rental property? Do you know what type of tenant likes what type of property and features?
Let’s break it down by niche tenant market. These are some different types of tenants and their general preferences. Remember, take this list with a grain of salt – every tenant and situation is unique.
The Bachelor/Bachelorette (Singles)
These are singles looking for a rental property to rent for a short period of time, ranging from one to two years. They could be unsure where they’ll end up in the near future, are waiting to make more money before purchasing a property, or just a need place of their own because they’re no longer living with their parents or in a dorm.
What’s the optimal property for these tenants? Usually an apartment is what these tenants are after. Some will want a studio or a one-bedroom apartment while others can’t afford the rent on their own and will look for a multi-bedroom property in order to share the rent with a roommate.
What do they value most? Location and price. If singles are renting your property, they’re not in it for the long run. Hence, the property features aren’t the biggest concern. Rather, they will value getting to work, and other places of interest in the shortest amount of time. Likewise, they’re also looking to save money and aren’t willing to splurge with one only source of income, which means finding the best deal is a priority.
Two’s A Pair (Couples)
Let’s talk about newlywed couples looking for their first home together. They’ve come to your rental property. What do you have to offer? These couples might stay longer than singles, ranging from two to three years, and seek out an apartment or townhouse.
Such tenants might be a little bit more meticulous about a property’s features. What do newlyweds value most in addition to location and price? Space and storage. Why? A new marriage is a union of two people, their lives, and their stuff. They’ll each need their own space and storage to make adapting to the new lifestyle a little easier. Keep in mind, they might have their first child while in their first home together and are factoring that into the amount of space available.
If families are looking to rent, it could be because they’re downsizing or someone got relocated to a new job – there are multiple possible reasons. Families renting could also have the intention of only renting for a couple of years, but will definitely have higher standards for a rental property.
What kind of property do families want? A townhouse or single-family home.
There are all kinds of different families, but families usually seek out the same things in a property. In addition to location, price, space, and storage, families want outdoor space, curb appeal, safety, and nearby schools with high ratings. In addition, a family needs all of the amenities – washing machines, dryers, parking, just to name a few.
Is it possible for a tenant to get everything on their checklist? Not really. Families that seek out these properties are usually willing to pay more rent and be far away from downtown. One advantage with relocating families is that many companies will pay for their employee’s housing, meaning an investor can make a lot more money.
It might sound like they’re being too picky, but a rental property that meets these criteria is a successful one and one that will be rented.
How is an investor supposed to get all of this? Start with location. Select areas that are growing – those are the areas that are usually closer to jobs and schools. If it’s in the suburbs, the median home price will likely be lower, allowing an investor to buy a bigger property and charge more rent.
What are high-end tenants? These are renters who look for luxury rental properties. It’s not just wealthy executives and professionals that are seeking such properties, but also retirees and millennials! Times have changed and buying a house by mid-late twenties, is not necessarily the norm anymore. While these retirees and millennials have the means to purchase a property, they are seeking out high-end rental properties and the chic lifestyle that comes with them.
Although this is a very broad group, these tenants want luxury apartments. What do they value most? Location and amenities. That means all the bells and whistles and amenities that you can think of. Luxury apartment buildings are usually in downtown, close to the best restaurants, and the amenities include an upscale gym, a fancy space for events, swimming pool, and concierge services.
While the rental income can be significantly high from such properties, don’t forget to include condo fees in your cash flow calculations.
Remember, you won’t find a rental property that pleases everyone, but part investing is properly accommodating to the niche market that surrounds you. By meeting their expectations, you’re likely to maintain low vacancy rates and generate high rental income.
Not sure what property works for what area? Check out Mashvisor to find the optimal property type based on a neighborhood analysis, in addition to expected rental income.