The five most common types of tenants have been identified by British real estate firm Belvoir, and they have also suggested how to find the right one for your rental property.
Types of tenants:
Single
PROS: One renter means there will be less wear and tear on your property. Expect to minimize maintenance costs with one renter in your rental property. Not to mention, you will only need to develop a relationship with one person.
CONS: Because there is only one tenant, this means there is only one income coming in to pay rent. If your tenant falls on hard times it is likely that you may receive late payments – or no payments at all – since there is not another income to rely on. Also, a single tenant’s living arrangements often change, whether it’s relationship related or adding in roommates.
Married with Children
PROS: Families typically commit to leasing long term as they want a stable foundation for children. Many times both parents bring in an income, which increases the likelihood of rent payments being made each month. It’s likely that these tenants have been homeowners before, so they will be helpful when it comes to moderating maintenance issues and upkeep.
CONS: Because families require more space, they will be seeking a larger home – this means your initial property purchase will be higher. Your initial expensive investment property will then acquire more wear and tear with a large family with kids, so the maintenance costs will be higher.
University Students
PROS: Many landlords might shy away from renting to students, but there are positives to this type of tenant. Students tend to commit to a full academic year of renting and there are normally other roommates too. This means your property will be off the market and full of multiple incomes. And, if for some reason rent is not paid there is a guarantor you can seek rent payment from.
CONS: Students are new to renting and with so many bodies in one house, there is going to be more wear and tear and probably even a higher cleaning bill. Although the students commit to an academic year, they will usually move once it’s completed.
Pet Owners
PROS: Renting to pet owners broadens your market, as some rental agencies have strict policies regarding animals. When you welcome pets into your rental property, you are likely to gain a long-term renter as they have limited options. A bonus is the added security a pet dog can bring to a property.
CONS: Allowing pets into your rental property comes with the obvious pitfalls: possible damage and lingering animal smells. It may be difficult grant access into the home to a maintenance worker as a large pet might scare them off.
House of Roommates
PROS: Students are not the only types of tenants sharing space. Now professionals will let individual rooms to cut down on costs and this brings in multiple incomes to cover the cost of rent. It also means higher rental yields as you will be renting our individual rooms rather than one house.
CONS: If so many different individuals living in one area, there will be lots of shifting and turnover is likely to be high. Also, the costs to renovate a house and make it user-friendly for multiple individuals can be costly.
Keep these types of renters in mind when purchasing your next investment property and when you’re seeking out renters to fill it.
