When you purchase an investment property you need to have tenants to make it work – right? Well before you purchase you should really understand your future tenants. The ‘target tenant’, the ones that are likely to want to rent your property.
You are not going to be living in this property, so you need to understand the mindset of those that will be. Why? If you truly understand what will impress your target tenant, you will then be able to determine if the investment property you are looking at is in fact a good one. Of course this is not the only factor that will determine if the property is a wise investment, but it will help.
You need to research and determine what the household structure and the demographics are in the area that you are looking to buy? Do they match your ideal?
- For example: Do you want professional couples renting your property?
- What if your target area is more supportive of families? Are you ok with kids in your property?
- Are properties in the area mainly 1 bedroom or 4 bedroom? How will this impact your target?
You may have an ideal in mind, but if the area you are looking at investing in doesn’t match your target, then either you need to adjust your target or move to a different location.
Now that you have narrowed down who your target really is, let’s get inside their head:
- What is the average age? – This will dictate the style of the property
- What is the average income? – What will your tenants be able to pay for your property?
- What are the dominate nationalities in the area? – This will affect the interior of the property and also a feeling of ‘belonging’ to your tenants
- What is the security like for your building? – This will be important to single women and the elderly.
- What amenities do you have? – Will your tenants be proud have guests come and visit?
- What is the layout of the property? – Is there a natural flow that will fit how your target tenant(s) live?
- What are the finishes? – Do you have dated carpet and hardware? What impact will that have on your target.
You need to know your target inside and out before you sign! Know who you want living in your property, make sure you are catering for them through location and the property itself and you have a very high chance of attracting those tenants.