In business strategy, one of the first and most important activities is to define your perfect (target) customer and gather as much understanding as possible about what that customer values. With a target customer segment in mind, then you set about developing a product or service that your customer is willing to pay for that consistently meets their needs better than the competition.
When we bought our two SF rentals, I used that same approach. We first identified our target renter profile. In our case, it was a young professional family with 1-2 children and maybe a dog who care about high quality schooling and a family-friendly home and neighborhood. Then everything we did was focused on that renter segment, from deal searching to refurbishing to pricing to marketing. That approach worked out extremely well for us, and we plan to use it heavily in future investments, especially as we move into MF properties.
So my question to the BP community is this: how have you used that approach, and how has it worked out? I'd love to hear specific stories and examples. Thanks!
"it was a young professional family with 1-2 children and maybe a dog who care about high quality schooling and a family-friendly home and neighborhood."
First, I hope you are being smart and following fair housing practices in advertisements and such. There is no problem with targeting these people but discriminating against others is a different boat all together. That being said...
Some of the ways I have influenced the sphere of prospective tenants I get is:
1) I don't do Craiglist. I find at least in my area it usually doesn't produce quality leads that have stable income and clean eviction record.
2) I pay particular attention to market rents and what mine is. If you want to attract professionals with higher income, have your rent reflect that. Most logic says that the more a person pays for a place chances are the better they will take care of it.
3) Presentation. How the unit shows is a big thing for attracting professionals. Overgrown yard, weeds in flower beds shows a lack of caring and invites a lack of caring. Prospectives can overlook a "work in progress" but not easy maintenance that isn't done.
I'd note that the area that you target can definitely have an impact on that profile. In Newport Beach, we're better off targeting millennials with good jobs because they typically are too busy working, still saving for a home and are thankful to have a nice place to live. We also have a high population of millennials with good jobs whereas most families own or rent for a year and then move on. Works for us, but maybe not for everyone.
@Corina Eufinger , fully agree with all your comments and thanks for sharing. Knowing who you're targeting and then how you go about it are very different concepts for sure. In our situation, rather than specifically say who we're targeting, we focus on the benefits, selling points, and value-drivers that our target renters care about. That, combined with our approach to pricing, staging, and presentation, all have resulted in very high-quality tenants that exactly fit our target demographic. It's been a great technique.
@Kristina Heimstaedt , great perspective as well. Your comments are actually quite ironic. I'd just recently realized that our city has a very different profile than even the city right next door. And even neighborhood to neighborhood can be different. So a winning profile in one area might not work in a different area. Reinforces the need to get to know the target renter profile in each area of interest and then focus your property search on that profile. Great stuff, thanks for sharing.
I target adults only and prefer seniors. How I do it is through selective screening and I have been 100% successful.
By instituting certain screening standards it will naturally eliminate the vast majority of non target applicants.
For example young couples with children will generally have lower credit scores. In this regard by accepting the most qualified my target group rises to the top.
Seniors do not care about schools they care about piece and quiet, therefor invest in B+ quieter older neighbourhoods. Seniors are looking to downsize so look at purchasing smaller properties without stairs.
@Thomas S. great comments on the older adult / senior citizen segment. And you showed how to extend that to the property search and marketing / screening process. Perfect example, thanks for sharing.
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