Selecting good tenants is one of the keys to being a successful landlord. Getting those good tenants to stay for the long term is another. Long term tenants are good for business as they reduce the costs associated with tenant turnover. However your property’s location and the associated tenant base may not foster long term tenancy.
Renting to the Hip and Trendy
Many of my properties for example are located in what could be called the “hip and trendy” part of the city. It has a lot of the cool restaurants, clubs and other amenities that attract the so called “young urban professional.” As such, it is a strong rental market (and thus attractive to people like me) and by using our tenant selection criteria we locate and rent to many great tenants.
The flip side of the above is the fact that most of these “young urban professionals,” while being great tenants, are in that stage of their lives where change is a constant. They graduate school, take new jobs, move in with significant others, break up with significant others, get married, have children, buy houses and a whole host of other things that cause them to move on in their life. All of which tends to increase the level of tenant turnover.
I often talk with landlords who own properties in other parts of the city who see a complete reversal of my issue. While they may not get the most creditworthy tenants, they search for and get tenants that will stay for the long term. Their tenants are generally in a later stage of their lives and have friends or family nearby, want their kids to go to a particular school or their job is in the area.
As I said, our tenants are generally pretty good and we generally get our properties back in great condition. But there is always “normal wear and tear” with little things that need to be fixed or touched up. Being in a strong rental market also means that we can usually re-rent our properties very quickly. But turnover does cause some administrative expenses. There is paperwork to be filled out and reviewed, property showings, ads to be placed, etc. In short, turnover costs us time and money.
So be aware that some strong rental markets may not be the best rental markets. Ideally you want tenants who can and will pay and who will also stay for the long term. My rental market is just not conducive to both. Am I complaining, not really, well maybe just a little, but we generally do pretty well by offering a quality product at a competitive price. It is however amazing what you can see with hindsight.
I am interested to hear others take on this subject. What is your rental market like? What type of tenants does it provide for your rentals?
Photo: Keoni Cabral