Property investment is similar to retail in the way your “customer” or tenant needs to always be top of mind. Appeal to everyone and you appeal to no one. Your ideal tenant should be considered from the moment you start looking for an investment property to purchase, as this will determine what type of property you buy and where. Keep in mind that demographics in a certain area will change over time as new developments are built and society changes, so your ideal tenant may change as the area does too.
Thanks to our varied society: demographics, job opportunities, interests, etc. there is no shortage of different lifestyle groups to niche your property for – especially in Canberra. You can determine your ideal client using a simple formula - the fail-proof 5 Ws: Who, What, Where, When, and Why…
Think about your dream tenant…yes, a tenant that pays the rent and looks after your property is ideal. This means someone with a secure income and good references will be favourable. Take time considering your options with your property manager, who will have a skilled eye for spotting a-class applicants, so you can match the right tenant with your property.
If you own an apartment in a densely populated area that is close to shops, restaurants and bars, then a young professional couple would appreciate the location. If you decide to pitch your property to this type of tenant, consider other aspects of your tenant’s lifestyle, such as where they work, what type of work they do, how often they work, as well as other interests.
For example, a young professional would appreciate modern finishes and appliances. Dedicated workspace would be helpful if they work from home, and a stylish living space would be great for entertaining. Other perks such as integrated speakers or built-in charging stations are also attractive features for this market.
If your investment property is a 3-4 bedroom house in the suburbs, your ideal tenant would probably be a family. Most families favour functional living space – or multiple living spaces for parents and children. Clean, easily accessible bathrooms (with at least one bath) are important, as is a good-sized kitchen, storage and outdoor space for the kids and entertaining. The finishes don’t need to be high-fashion and appliances don’t need to be top of the range, but durability and function are paramount.
As our environmental conscience increases, so does our expectation for eco-friendly homes. “Green” homes made from sustainable, natural materials, or with features such as water tanks, solar panels, and insulation (made from recycled materials) are becoming highly sought-after. According to an article on LotNetwork.com, research conducted by Dodge Data & Analytics, in partnership with the National Association of Home Builders (NAHB), in 2015 found “nearly one third of home builders (31%) report that they are currently doing green builds for more than 60% of their projects, and over half (51%) expect to be doing that level of green building work by the year 2020. In addition, over 80% of builders expect that by 2020 more than 16% of the homes they build will be green housing”. This figure doesn’t include the number of properties that are renovated with green materials and principles. Green features are attractive for tenants and landlords alike, as in addition to social conscience, they also reduce bills.
Property location is a major determining factor of what type of tenant will be attracted to your property. Young professionals often want inner-city location with access to nightlife and dining. However, families often opt for a larger property that is conveniently located to facilities such as supermarkets and parks with playgrounds. The location of your property will also determine if you opt for a short or long-term leasing option. Conveniently located properties often work well as a short-stay rental, and command a higher rental rate. Engage a property manager for advice and consider all your options before committing to one particular strategy.
If possible, try to set your property lease date at a time when you know you can easily find another tenant. This will protect you if your current tenant moves out at the end of their lease. For example, if your tenant moves in at the beginning of the year, offer a 12 month lease. If they move out at the end of this period you will hopefully be able to capture another tenant when more people move to the area at the beginning of the year. The times your ideal tenant is looking to lease a property may vary according to their work or other commitments, such as university, school terms, etc. This is particularly relevant for Canberra’s transient population.
Leasing property can be a competitive game. The challenge, particularly if you own an apartment in a block of similar apartments, or a house in an estate of comparable houses is how you stand out from the crowd. Your property needs to have an X-Factor – something that no one else has. Think in-built coffee machine for an apartment, or clever space-saving solutions for a family home. There are many more ‘out-there’ ideas but you need to consider what is practical for your property…Pirate Ship-themed bedroom anyone? By carefully considering your market and their interests, you can niche your property with features that make it a must-have for your ideal tenant.
As in any business, careful consideration of your ideal “customer” (or tenant) will put you ahead of your competition, and find the best match for your property. This will hopefully result in what every landlord dreams of - a loyal tenant who looks after your property and pays the rent for many years ahead.