One of the most important things you need to understand as a property investor is your tenant market.
After all, these are the people who help you pay the mortgage each month and ultimately, maintain a healthy cashflow position for your investment portfolio.
A survey conducted last year by realestateview.com.au provided an interesting insight into what renters want and don’t want from a prospective home, including their pet peeves and lifestyle preferences.
So what are tenants most annoyed by and what makes them feel a greater sense of loyalty to their landlord?
There are numerous issues that can crop up for both tenants and property owners during the rental process.
But if a tenant remains too unhappy for too long, you can almost guarantee they’ll up and leave at the expiration of their initial lease term.
The fact is, the longer you keep your tenants happy, the longer they will be inclined to stick around and the less likely you are to face extended vacancy periods during the re-letting process, which can also attract property management fees.
So it’s a good idea to avoid the following top four pet peeves listed by respondents to the Housing Sentiment Report…
- 59.7 per cent find it annoying when they cannot make any changes to the property, such as painting a wall or putting up pictures.
- 44.1 per cent are frustrated with unresponsive property managers.
- 37.8 per cent are unhappy with pet restrictions.
- 30.3 per cent complained about having to attend to repairs and maintenance items, paying out of their own pocket because it’s quicker than waiting for the property manager and/or landlord to sort it out.
The good news is these ‘pet peeves’ can generally all be mitigated for, primarily by choosing the right property management team to look after your rental.
If a tenant feels their needs are considered, and communication with the person looking after the premises is effective and timely, they will be much happier in the long run and more willing to report any maintenance concerns or questions that could be important for you to know about.
The top 5 ‘must haves’
The Housing Sentiment Report lists the following top five wants on tenants’ wish lists as follows:Tenants are becoming a lot more discerning nowadays and expect bigger and better things from rental properties; particularly inner city stock that commands a premium.
- 27.4 per cent say size matters most.
- 26.5 per cent said a large or well-appointed kitchen was top priority.
- 26.1 per cent look for premises that have air conditioning and/or heating.
- 19.7 per cent want the additional security of a garage for their vehicle or extra storage.
- 19.1 per cent said a nice outdoor space was important.
Keep in mind that ‘size’ does not necessarily mean bigger is better.
For some, it’s about form and function over square footage.
As with the former list of ‘pet peeves’, most quality property investments will either already tick these ‘ideal rental’ boxes, or have the potential to do so with some cost effective cosmetic improvements.
Of course, location is the biggest determiner of where a tenant ultimately decides to call home.
In fact today, the flexibility of relocating to another area for work and/or lifestyle reasons is often a big reason for many people looking to long term tenanting as a more viable accommodation option.
Don’t get me wrong, many renters still aspire to their own home, but a good deal choose to invest and rent something in their preferred postcode, where it’s often cheaper to be a tenant than it is to make monthly mortgage repayments.
A place to call home
So what are the fundamentals that make one neighbourhood a more compelling prospect for tenants?
Remember, identifying a suitable investment is about catering to your market, not your own personal likes and dislikes, so how you determine the potential of a location should be based on general market demand from both owner occupiers (who drive values) and tenants (who pay your mortgage).
Given we’re focusing on what renters want in this blog, here are the top four factors listed in the report that sway a tenant to select a certain location…
- 53.9 per cent said safety comes first, above all else.
- 44.2 per cent wanted good access to public transport.
- 34.7 per cent listed shopping and retail amenity as a priority.
- 34 per cent were after proximity to work.
None of these factors are news to me, given the most popular inner city areas – according to long term value growth and rental return trends – tick all of these boxes, as well as that all important café culture and walkability lifestyle.
Successful property investors not only have a thorough understanding of the property market from a price perspective, but from a person perspective.
They recognise that their assets are not just bricks and mortar buildings, but the tenants who reside in them.
It’s essential for every property investor to take the time to learn the ‘people’ aspect of their market, literally walking in the prospective tenants’ ‘footsteps’ when researching any given area and investment.