Tenants are the lifeblood of a sustainable property portfolio. Without them, investors would struggle to keep up with mortgage repayments and all the other associated holding costs of housing based assets.
But how many landlords genuinely make the effort to understand the type of tenant their investment needs to please, in its incarnation as a rental property?
Getting to know your market and in particular, their likes, dislikes and living requirements, should be one of the pillars on which you base the selection and subsequent acquisition of any property asset, to ensure a stronger investment foundation.
Consider inner urban Brisbane postcodes for instance, which tend to attract younger professionals looking for a convenient commute to their CBD offices, with a healthy dose of cafe culture thrown in for good measure. They want low maintenance accommodation close to relevant amenity.
In this scenario, you’re more likely to see consistent long-term gains with a spacious, functional and modern two-bedroom apartment that suits these discerning, corporate minded singles and couples, who appreciate a little luxury.
The good news is, identifying your market doesn’t have to be a difficult and time-consuming process. Here are five simple ways get started…
From population statistics to data that drills down into the employment status, professions, average income and ages of residents in a particular region, it’s advisable to start with the basic facts when getting to know your tenants.
These days Internet resources like realestate.com.au, Domain and the Australian Bureau of Statistics’ portal, make it relatively easy to undertake market research from the comfort of your home or office.
Another great resource is id.com.au, where social atlases and community profiles provide an array of information around the diversity of different populaces.
Consulting local experts, who work at the coalface every day, is of course one of the best ways to get a handle on the tenants and buyers your property investment should appeal to.
There’s nothing quite as telling when it comes to the type of resident drawn to a particular postcode, as the amenity in and around the neighbourhood.
Logic dictates that a large number of schools and recreational infrastructure is more likely to appeal to young families with children, who might prefer a detached home.
Conversely, bars, restaurants, cafes and retail facilities will be a magnet for money making singles and childless couples who want to live it up and enjoy the fruits of their climb up the corporate ladder.
Property markets are more influenced by human behaviour than any other investment vehicle. When a large-scale transition occurs within society, we often see changes in our residential housing sector as well.
During the seventies and eighties, baby boomers fuelled unprecedented levels of outer urban sprawl in their quest for the ultimate family McMansion.
City living was considered lowbrow and apartments were largely the ‘less desirable’ domain of middle class migrants who couldn’t afford to claim their little bit of the ‘burbs.
Fast forward thirty years later and we are witnessing an unprecedented generational shift, as those same baby boomers downsize to maintenance friendly townhouse accommodation, while their gen X and Y offspring show a distinct preference for (now trendy) inner city apartment living.
This type of behavioural bias can make an immense difference to levels of tenant and buyer demand in any given area at any given time.
Failing to account for the most fundamental of fundamentals when it comes to housing – people and their ever-evolving relationship to property – means potentially missing the mark entirely during the critical asset selection process.
Get it right though, and you’ll continue to reap the rewards of a well-chosen property portfolio for many years to come, with consistent returns and capital growth to sustain and grow a successful retirement fund.
If you would like to know more about the intricacies of tenant demographics in your local area and how you can better meet the needs of your market, contact Little Real Estate and speak to one of our experienced team members.