Knowledge to help you position your property properly
The most successful buy-to-let landlords don’t have long tenancies by luck. They suffer fewer void periods and get great tenants because they know who they will rent to, and understand what their target tenant wants from their home. If we analyse the profiles of tenants across the 1,200-plus properties that we manage for property investors, we see that tenants fall into three broad types.
In this article, you’ll learn about these tenant types, and how these different tenants may impact your buy-to-let strategy.
The older a tenant is, the happier they are to rent
The older a tenant is, the more comfortable they are to be renting. The ‘silver-haired renter’ – tenants older than 55 years, and without children living with them – are the most contented as renters.
Often, these tenants are renting because of a change in circumstances. They may have suffered a broken relationship, for example. Their earnings are often lower, too. These tenants may have had enough of corporate life, and have chosen a more relaxed and less time-demanding job.
They may be releasing equity from a home they have sold, using the profit to fund their retirement. For these tenants, the freedom from maintenance and repair requirements of being a homeowner is a bonus. However, they may also want the freedom to decorate and make small changes to their new home, even though they are renting. That can be both good and bad news – you’ll need to lay down ground rules and ensure they are followed.
These tenants will rent on average for 4 years and longer, and plan to rent for many more years.
Young families want to own, but the deposit is a challenge
People with children, typically tenants between the ages of 35 and 50, generally want to own their own home. However, raising the deposit is a problem. They are more tuned to this financial conundrum than younger tenants. They also have higher costs (children) but are happier to pay a higher rent for the right property.
This group of tenants requires larger properties and can afford to pay the rent because they are often at the peak of their earning ability. But, they are likely to be a tenant for a shorter period than older tenants, as they save to pay the deposit for the ‘added security’ of homeownership.
These tenants probably plan to rent for up to 7 or 8 years to give them the time to save a deposit.
First-time independents have a goal of ownership
New to living on their own, first-time independents are least happy with renting. For them, it is no more than a stepping stone to the paradise of homeownership. They are much more likely to rent with friends, being single or in a new relationship. Often, their relationship status is a reason why they are renting – they don’t want to commit to homeownership and a mortgage before being confident that the relationship will last.
8 out of 10 young renters want to own, and most believe they will do so within 5 years. The average length of renting in this age group is around 4 to 5 years. However, because of factors such as rapid career progression and fragility of early relationships, the average tenancy length is lower in this age group than others.
What is it that these target tenants want from a rental property?
When interviewing prospective tenants, we also see many of the same things on wish lists within these different tenant types. Of course, every tenant is different, but generally speaking, here’s what the different age groups want from their properties:
This group works hard and plays hard. They want to live where the action is, near to transport hubs and recreation facilities. They are more social, so properties with a communal feeling are popular. Shared facilities like common areas, games and TV rooms, and gyms are popular.
They may also be prepared to pay a premium for other services, such as high-speed broadband, a concierge service, and cleaning.
Having children (or planning to have them), these renters want a safe outdoor space. They also value services such as high-speed broadband and cable TV, though they are less likely to pay for parking, storage, gyms, a concierge service, and house cleaning. They are more likely to consider these things as surplus to requirements, wishing to save surplus disposable income towards a deposit for their first home instead.
These tenants are more money conscious than others. They are moving towards or already in retirement, and so their ability to generate extra income is restricted. Distance to public transport options is important, and communal living becomes more important.
While internet connection and TV are appealing, they will also be concerned with budgets. They are also more likely to want to rent a pet-friendly property. Cleaning and gardening services are not important at all.
What all tenants want
There are two things that most tenants across all tenant types want from their rental property:
· A good relationship with their landlord/property manager
· Ease of reporting maintenance issues
Our mission is to help all buy-to-let investors secure the best tenants, and benefit from long-term tenancies that reduce costly void periods. To find out how we can help you with your buy-to-let goals, contact one of the Ezytrac team today on +44 01522 503 717. Ask us about how we build the tenant/property manager relationship, and ask to see our repair reporting system in action.