Having a target market of tenants in mind for your buy-to-let property is important as it can help you decide what kind of repairs and cosmetic upgrades you should take on and even which property to buy for your investment.
For example, families appreciate lots of storage space and a nicely maintained outdoor space, while students don’t care too much about having posh furniture and are more interested in big, functional bedrooms with space for a desk and a good common area for socialisation. That’s why today, we’ll take a closer look at a few key tenant types to help you figure out what your target market should be.
But first, we should point out that while groups of people often share similar characteristics, everyone is different and at the end of the day, finding your ideal tenant(s) is more about finding the person, not the demographic, that best suits your property. With that out of the way, let’s get started.
Students make for a popular target market for buy-to-let landlords, and with Edinburgh and Glasgow both being home to a large number of university students, it’s not hard to find a large pool of applicants for a student-friendly flat. However, this also means that this is a popular corner of the rental market – especially once you take into account purpose-built student accommodation.
There are many negative stereotypes about student tenants: wild parties, noise complaints and a disregard for their landlord’s furniture and fittings are all popular complaints. However, it’s important to remember that not every student is like this, with many being mature, conscientious and responsible.
Additionally, renting to students comes with some specific upsides. Instead of safety deposits, they’ll often rely on a guarantor, typically a parent, adding a level of security to your rental income. With student loans coming in regularly, they also have a regular “income” they’re not at risk of losing unless they drop out of university.
With students, you’ll have to find your tenants quickly within a short period of time – otherwise, you risk your property sitting empty for the academic year. Students also tend to move often, commonly every year, so if you want long-term tenants for your property, they’re not your ideal target market.
And if you’re not interested in managing HMO property, you’ll have a smaller pool of prospective tenants, as students tend to want to share flats with friends to save money and enjoy the social aspects of student life.
Another popular target market for property investors is the young professional. After graduating, young people tend to want to stay in one place a little longer and make more of a home for themselves. With more disposable income, they often move from frequent house parties to more nights out at pubs and nightclubs, which could mean fewer noise complaints.
That being said, young professionals do still tend to move around quite a bit to follow new job prospects. Many want to continue sharing HMO accommodation to save on living expenses, though you’ll see more people sharing with strangers, which is likelier to lead to conflicts.
Professional couples are also a popular tenant type, as two incomes mean the other one can usually foot the bill for a time if one person loses their job. Renting to couples also means you’ll know who’ll be using your property on a daily basis.
Young professionals tend to expect a little more from their homes than students who are typically happy enough with basic furnishings. Young professionals may want trendier furniture and things like dishwashers and tumble dryers.
Larger non-HMO properties make for great homes for families who require more space. It’s true that children can cause a mess but this can usually be remedied with a lick of paint the parents are usually happy enough to apply themselves. Additionally, families are more likely to own their own furniture so you don’t have to furnish your property and risk your items being the target of a messy toddler on a rampage.
Families will typically stay in place for longer to make a proper home for themselves and to avoid the stress of moving with kids. This makes families a good target market for those looking for long-term tenants looking to put down roots and make a home for themselves.
Elderly tenants are often left out of the discussion when it comes to determining your target market, but with the UK population ageing rapidly, it’s important we include those past the retirement age in this conversation. Elderly people make up 10% of tenants in privately-owned rental properties, and this number will only rise in the future.
Older tenants, like families, tend to want to stay in one place longer to avoid the hassle of moving, especially when you consider the fact that they’re past the age when career changes and young children are in the picture. Elderly tenants also tend to be quiet and respectful of their neighbours, with wild house parties being more unlikely.
Of course, you may need to think about adapting your property to suit older tenants, as ageing often comes with things like mobility issues and disabilities. Installing simple and inexpensive things like handrails can make your property more attractive to this market, as often it is the tenant who has to foot the bill for adaptations like these. It’s also good if you’re able to check in on them regularly and have contact numbers for family members.
As older people often live on a fixed income like a pension, they’re vulnerable to rent increases, meaning you may be faced with the choice of losing a good long-term tenant or not charging as much rent as you feasibly could.
How Cox & Co can help you find your ideal tenants
Sourcing and securing tenants can be very stressful and time-consuming, as is managing your relationship with them throughout their lease. That’s where an expert letting agent can be worth their weight in gold.Here at Cox & Co, we’ve made it our mission to offer a complete solution to property investors. Not only can we use our local expertise to find you the best possible tenants and manage them on your behalf, but we can also help with mortgages and the overall management of your property portfolio. Get in touch with us to find out how we can help make your property investment experience a breeze.