Find The Best Target Demographic for Your Rental Properties in 2023
As a real estate investor, it can be easy to get caught up in trying to find the perfect properties to invest into. However, it is equally important that you take the time to consider who you want to rent your properties so that you can structure your investments accordingly.
Just like how not every investment property is fit for every real estate investor, not every rental is suited for every tenant. So, instead of playing catch-up and trying to figure out who would like to live in your rental properties, you should be planning ahead and buying properties with certain tenants in mind.
Determining a target demographic can be difficult for new investors, so in order to help you make that decision, here are some tips to get you started. But first, to learn more about which demographics lenders prefer you target, click the link below to book a free strategy call today.
Consider the Local Market
Before you consider anything else, take a moment to look at the local real estate market. This includes both the properties being bought and sold as well as the rentals that are available. This will allow you to gauge availability and demand all at once.
What Types of Properties are Available for Purchase?
The first step when gauging the local market is to take a look at the types and styles of properties that are available for you to buy. This will help you determine which target demographics you cannot serve in a particular area as well if whether you should look elsewhere to suit a target demographic you do want to serve. After all, there is no point in considering renting to retirees and seniors if the only available properties are three-storey walk-ups with little room for any mobility aids or accessibility features.
Consider which types of properties are better suited to different types of tenants. Students typically look for apartments on individual rooms for rent due to their limited income. Meanwhile, a family with young children will usually to be looking for a house with a yard. Seniors and retirees often find themselves looking for spacious single-storey homes with plenty of room to install any accessibility features they may require.
Discover How To Rent A Property With This Step By Step Guide
What Does the Rental Market?
After you see what is available for purchase, take a look at the rental market. Which types of properties are in high demand? Who is renting them? Which types of properties are sitting vacant? Why is that the case?
By answering these questions, you can determine which rental investments are going to bring you the most success and which target demographics are going to help you get there.
Consider the Property Management Needs
While every property is going to share the same core needs, property management will still vary depending on who you are renting the property to. Depending on the target demographics of your rental portfolio, you may need to prioritize different aspects of your property management.
Average Turnover Expectancy
Different groups of people rent with different intentions as to how long they plan to live in one place. For example, while a family may want to rent a house for many years and view it as their home, students may only intend to stay in once place for a single semester ranging from four to six months. This will greatly impact your turnover expectations.
If you want a primarily hands-off experience, you are going to want to prioritise tenants who plan to rent for extended periods. However, if you want the freedom to continually update and improve a property between tenants or want the freedom to take advantage of market appreciation between tenants, it may be a good plan to aim for a target demographic with a higher average turnover rate such as students and young working professionals.
Expected Maintenance Demands
The frequency and sorts of maintenance demands you can expect from a tenant will vary on the tenant’s capabilities and use of the property.
For example, students and younger tenants may deal with more frequent wear and tear if they are throwing parties or bringing more guests in, they are less likely to put in a maintenance order if there is not a glaring issue, they cannot resolve themselves. However, older tenants or tenants with physical disabilities who may be gentler on the property and cause less damage may need you to come in more frequently to fix smaller issues they cannot manage on their own.
What Are Your Goals for The Property?
Finally, when deciding on the best target demographics to cater towards with your investments, you need to consider your goals for the property.
If you are looking to earn steady cash flow to cover your expenses month-to-month, you may wish to find tenants who are going to stay long-term such as families or people who do not plan on moving until they eventually buy their own property later down the line.
If you are aiming to capitalize on the property appreciating, you may want to prioritise low-impact tenants so your property will stay in good condition. Alternatively, you could aim for tenants with higher turnover rates so you can take more opportunities to add value to the property through updates and renovations between tenancies.
Remember: Do Not Be Discriminatory When Deciding a Target Demographic
While most investors will have a preferred target demographic, it is important you do not discriminate against tenants in pursuit of the ‘ideal tenant.’ In Canada, it is illegal to discriminate against a tenant for age, race, sex, gender, religion, family status, disability, or citizenship. So, while you may buy a property with the hopes of renting to someone from your ideal target demographic, you cannot turn away a qualified tenant solely because they do not fit criteria that falls into those categories. If you are caught discriminating against prospective or current tenants, you may open yourself to tenants taking legal action against you.
If you are ready to buy new rental properties or would like to learn more, let us help you here at LendCity. To get started with us just give us a call at 519-960-0370 and visit us at LendCity.ca Alternatively, you can click the link below to book a free strategy call with our team at LendCity.