{"id":171737,"date":"2024-05-15T07:05:00","date_gmt":"2024-05-15T13:05:00","guid":{"rendered":"https:\/\/www.biggerpockets.com\/blog\/?p=171737"},"modified":"2024-05-14T09:33:57","modified_gmt":"2024-05-14T15:33:57","slug":"if-youre-only-focused-on-buying-properties-youre-doing-it-wrong","status":"publish","type":"post","link":"https:\/\/www.biggerpockets.com\/blog\/if-youre-only-focused-on-buying-properties-youre-doing-it-wrong","title":{"rendered":"If You\u2019re Only Focused on Buying Properties, You\u2019re Doing It Wrong"},"content":{"rendered":"\n<p class=\"wp-block-paragraph\">The title isn&#8217;t clickbait; it&#8217;s a fact and easy to demonstrate.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Consider this: Has there ever been a time in human history when a property paid rent? No, tenants pay rent, not the properties they live in. Therefore, instead of solely purchasing a property, focus on who will pay the rent: the tenant.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">About Tenant Segments<\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">Many people believe everyone who rents is homogeneous; they all have the same behaviors. This is not true. The renting population comprises many segments, each with different housing requirements and behaviors.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">For example, Las Vegas has three major tenant segments, as illustrated in the table.<\/p>\n\n\n\n<figure class=\"wp-block-table\"><table><tbody><tr><td><strong>Tenant Segment Handle<\/strong><\/td><td><strong>Transient<\/strong><\/td><td><strong>Permanent<\/strong><\/td><td><strong>Transitional<\/strong><\/td><\/tr><tr><td>Average Length of Stay<\/td><td>1 Year<\/td><td>>5 Years<\/td><td>1 Year<\/td><\/tr><tr><td>Average Monthly Rent<\/td><td>$900<\/td><td>$2,000<\/td><td>$3,000<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<p class=\"wp-block-paragraph\">As you can see, the average length of stay and rent vary among different segments. Each segment also has distinct housing requirements and behaviors. Fortunately, there is a way you can target a specific tenant pool with the behavioral characteristics you need for income reliability.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Income Reliability<\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">To live on your rental income, you must be able to rely on it coming in every month. This requires that your property be occupied by a reliable tenant.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">A reliable tenant stays for many years, always pays the rent on time, and takes good care of the property. Reliable tenants are the exception, not the norm.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">How do you maximize the odds of always having a reliable tenant? Buy properties that attract people from a segment with a high percentage of reliable individuals.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">How do you find a segment with a high percentage of reliable people? Through property manager interviews. Essentially, ask multiple property managers: &#8220;If you were purchasing a property where the tenant stayed many years, always paid the rent on schedule, and took good care of the property, what properties would you buy?&#8221;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">I did this in 2005 when I started my investor services business. Most property managers gave the same answer:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Type: <\/strong>Single-family<\/li>\n\n\n\n<li><strong>Configuration: <\/strong>3+ bedrooms, 2+ baths, 2+ car garages, 1,200 to 2,100 square feet, one or two stories, lot size 5,000 to 6,000 square feet.<\/li>\n\n\n\n<li><strong>Location:<\/strong> Where they currently rent<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\">Once you know the type and <a href=\"https:\/\/www.biggerpockets.com\/blog\/why-location-is-important\" target=\"_blank\" rel=\"noreferrer noopener\">location<\/a> of properties most likely to attract reliable people, the next step is to purchase similar properties. We&#8217;ve done this for over 16 years, and the results have been outstanding.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Let me be clear: I did not select the property type, configuration, location, or rent range. I identified the segment of tenants I wanted to occupy my properties and bought similar properties. It really is this simple.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Final Thoughts<\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">When you start with the goal of income reliability and make property decisions based on that goal, your odds of success are high because it is location- and tenant-segment-specific.\u00a0<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The property type might be multifamily in one location, student housing, or single-family homes in another. You do not care what property type you choose because your goal is income reliability.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The alternative is choosing a property based on the opinions of others (who may be across the country) and hoping everything works out, which is no more than gambling.<\/p>\n\n\n\n<div id=\"hero-block_e04bdd03fb290864a4c20082dbf83f56\" class=\"first:mt-0 hero-block py-4  alignwide   has-background has-slate-50-background-color has-text-color has-theme-gold-color\">\n    <div\n        class=\"gap-10 lg:gap-20 flex flex-wrap lg:flex-nowrap max-w-screen-xl mx-auto px-4 relative lg:items-center \">\n\n        <div class=\"relative z-30 lg:w-1\/2 \">\n            <main class=\"py-4\">\n                \n\n<p class=\"has-slate-800-color has-text-color has-large-font-size wp-block-paragraph\" style=\"font-style:normal;font-weight:800\">Get More Time to Scale<\/p>\n\n\n\n<p class=\"my-3 md:my-5 lg:my-8 has-slate-900-color has-text-color wp-block-paragraph\" style=\"font-size:18px\">Find trusted property managers and get everything you need to make confident hiring decisions.<\/p>\n\n\n\n<div id=button-custom-event-block_4bb3c772a3a818078306195298e85a21 class='button-custom-event'>\n      <a\n    href=\"https:\/\/www.biggerpockets.com\/business\/finder\/property-managers\"\n        x-on:click=\"window.analytics.track('Blog Block | B2C Marketplace Property Management Finder', {\n      referrer: 'https:\/\/www.biggerpockets.com\/blog\/if-youre-only-focused-on-buying-properties-youre-doing-it-wrong',\n    });\"\n    class=\" btn-shape inline-block no-underline has-background has-theme-blue-background-color has-text-color has-white-color\" target=\"_blank\">Find a Property Manager<\/a>\n  <\/div>\n\n            <\/main>\n        <\/div>\n\n                <div class=\"lg:w-1\/2 first:mt-0 relative h-full lg:flex lg:items-center\">\n            <img decoding=\"async\" class=\"object-cover w-full relative z-20 my-0  rounded-md\" src=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2024\/05\/PM-Finder1.png\" alt=\"find a property management company\" title=\"\">\n        <\/div>\n            <\/div>\n<\/div>","protected":false},"excerpt":{"rendered":"<p>Paying close attention to tenant segments can make or break your success as an investor and landlord.<\/p>\n","protected":false},"author":613715,"featured_media":171739,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[5183],"tags":[],"class_list":["post-171737","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-landlording"],"acf":[],"comment_count":0,"_links":{"self":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/171737","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/users\/613715"}],"replies":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/comments?post=171737"}],"version-history":[{"count":0,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/171737\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media\/171739"}],"wp:attachment":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media?parent=171737"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/categories?post=171737"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/tags?post=171737"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}