If you’re just setting out on your journey to find an investment property you’re probably wondering why tenant profiling is so important before you even own the property.
In order to successfully let your rental property to the desired tenants you need to buy a property that will appeal to that type of tenant – this is why tenant profiling is important for residential investment property.
Types of tenants and the properties that will appeal to them
A good place to start is to highlight the different types of tenant and the properties that will appeal to each group.
When deciding which type of tenant you want to appeal to there are a number of property types to consider. Of course, if you’re buying an investment within a purpose built student accommodation building then you’re targeting students.
Whilst renting a large property to students can come with considerable management requirements and other complications, renting an apartment to a student that is located within a building that was purposely built for student use and in a location convenient to campus can prove incredibly successful.
Around 30% of all students live in purpose built student accommodation.
Furthermore, in the current climate students might be an attractive prospect – the indications are that the 2021/2022 academic year is set to be a bumper year for new students.
Those who chose to defer during the pandemic will want to start and many who are at the age to enter the job market are likely to instead go to university whilst there are fewer jobs available.
In 2020 there were a larger number of international students starting university who will return for their second year.
All indications point to student accommodation being a very valid opportunity for investors.
Many landlords will aim to place professionals in their rental property, often deemed the best type of tenant.
A professional tenant is one that is employed and usually in a skilled position, on an above average salary.
Modern properties where there’s minimal risk of things not working, where appliances are new and the property is contemporary and clean – professionals are looking for a property that is ultimately easy to live in.
Often short of time, convenience is key for a professional which is why location is equally important – city centre apartments are often preferred over those in the suburbs.
The types of properties that will appeal greatly to a professional tenant or professional couple renting together are one or two bedroom modern apartments within high quality and well run buildings in prime city locations.
Professionals are usually deemed the most attractive prospect for landlords.
‘Sharers’ is a broad term assigned to a group of tenants. A pair of professionals sharing an apartment can be an attractive prospect for a landlord.
When those in the industry use the term ‘sharers’ though they are usually referring to a house in multiple occupancy (HMO) type set up where a group of friends or even strangers rent a property together.
The reason this arrangement is not hugely attractive is due to the possibility of one tenant leaving and another having to come in which requires new paperwork. Wear and tear is often increased.
An HMO is a property that must be registered with the local authority by the landlord if it has more than 3 storeys or is occupied by 5 or more people in 2 or more households. This type of property requires additional paperwork and precautions to be taken by the landlord.
A smaller property might attract professional sharers. When buying a two or three bedroom apartment you are likely to find yourself with professional sharers, likely 2 or 3 professionals. The most important consideration for these tenants will be to have equally sized double bedrooms so that the rent can be split between them fairly.
They’ll also be seeking a property that is in a convenient location for commuting to work, likely in the city centre. Modern, high quality apartments are preferred.
A small group of 2 or 3 professional sharers can be an attractive prospect for a landlord.
Profiling tenant types and deciding which type of tenant is your target market before setting out to find a rental property can result in a more successful investment. A rental assurance can also provide peace of mind for the initial period.
Locations might have different demands to it’s important to be aware of demographics when looking for a buy to let property.
A member of our team can assist with guiding investment decisions based on tenant profiles and demand in each area. To talk to us about your plans to invest call us on +44 203 950 7939.