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What Type of Tenant Should I consider?
15 February 2018
In my day to day work in the property industry, I often hear the following from my clients: ‘I have seen this lovely flat near the train station, it is only £XYZ and suits my budget'.
Or, ‘I've just seen a three-bedroom house in XYZ village and I am thinking of buying it because it fits my budget and it is a good village with a good school and lots of local amenities. And besides, my aunt's cousin lives there so I know the area. What do you think, Sarka? Shall I buy it? Is it a good investment?'
Let me answer this question with a couple of questions….
• What is your target market?
• What type of tenant do you want?
As what you buy in terms of an investment property depends very much on your answers.
Let me explain further.
There are a few categories of tenants and each of them is different;
Single professional tenants, professional couples, professional families, social housing tenants, professional sharers - to name just a few.
Each category of tenants has different requirements. Before you purchase an investment property or decide to let out an existing property, you need to decide what type of tenant you want to serve.
To elaborate a little more on the types of tenant, for the sake of explanation, I will use two categories and those are single professionals / sharers and families.
Single professionals / sharers (i.e. two friends sharing a flat)
They will most likely like living in the town centre in flats that are near to the local amenities and transport links. They will want to be near bars, pubs, shops, railways stations, gyms, and so on.
They will often stay in the property 1 to 2 years and will move on after that, usually because of changes in their job or relationship status.
On the contrary, families will generally be looking for a quieter lifestyle that would suit their children's needs. They will look for homes in the catchment areas of good schools, quiet and safe areas where children can play, areas with nearby dog walks.
They will stay in the properties longer, typically 3 to 5 years. Wear and tear in the properties is often higher than in properties let to single professionals. However, you will have more stable tenants who often stay for many years, which minimises your 'voids', the times when the property is empty between tenants.
When considering a type of tenant, it is also important to consider type of furniture and furnishings you provide. This will vary from location to location.
In our area, professional tenants who are looking to rent for a minimum term of 12 months (and maybe renew the lease further) expect to have white goods and appliances included but properties are better let unfurnished. Ideally, they are modern, neutral properties.
Families do not mind if there are no white goods, however having a garden is crucial. Two bathrooms are often a very important factor as well and many families often have a pet too, so outdoor space and reception rooms with easy clean flooring are desirable.
When it comes to pets, many landlords are wary, however I would like to put your mind in rest here and give you little bit of food for thought.
We are a nation of animal lovers – according to Mintel in 2017, approximately 56% of UK households have a pet (around half being dogs and another half cats, with a small percentage of others such as birds, reptiles, fish, rabbits, etc.) and a huge 73% of households with children under the age of 16 have pets as part of the family.
Do you think that by not allowing pets, you are perhaps limiting your potential market by more than 50%, particularly if you are targeting the family market?
Do you know that you can actually reference a pet too?
By doing so, you can eliminate any risks and find your perfect tenant who will potentially stay and provide you with a stable income for many years.
Do not mix business with emotions here. Once you are a landlord, you are providing a service to your target audience.
If you do not get this right, your property may be empty for a long time or you may end up with a few headaches and diminished income from your investment.
If you would like our Ultimate Tenant Type Guide (UTT Guide) to help you maximise the income from your investment, please email firstname.lastname@example.org or register your details here
and we will send it to you very soon.
Happy Property Investing!
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