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                                                     Landlord's Specificity

Studies show landlords are becoming more specific when choosing their tenant, but why?

Usually landlords let to a mixture of different tenants throughout the course of their time in the industry, especially if they own multiple properties. But recently that is starting to change into a preference for a specific type of tenant. Over the last four years, the proportion of landlords letting to different tenant type has fallen. These tenant types vary from young professionals to families to retirees and everything in between.

The new phenomena being that landlords are starting to ‘’specialise’’ in a specific tenant is possibly perplexing because if it seems that rent is being paid on time and the property is being cared for, then why does a person’s profession or age group matter? It’s arguable that it could come down to profit maximisation. If you know a specific tenant market well enough, it will be easier to form lasting relationships and lead to more profitability. Despite the fact that most people who become a landlord do so in order to generate a profit, 17 percent (about 255,000) of landlords barely break even. And that figure increases to 25% for people that operate a single property.

Landlords are figuring that the best way to maximise profits without increasing rents is to better understand the market (specifically what it needs and how you can meet those needs). The type of tenant a property attracts is fairly easy to predict when you factor in the location, size, and feel of the property. For example, families tend to care a lot about the location of the property because the proximity to schools and amenities is very important for them. Professionals might look at the property and the first thing they think of is their commute to work and how far it is from public transport. Once you understand which type of tenant is drawn to the property, that’s when the different kinds of advantages ensue. For example, families can often look for unfurnished properties which means less money out of the landlord’s pocket for furnishings. Families and retirees appreciate stability so they tend to be sustainable Tenants. Company lets are generally low maintenance tenants. Every type of tenant comes with their own list of pros-and-cons, and this may be something to consider when investing in a buy-to-let property. To ensure the best profit margin, learn your best tenant market.

 
 
 
 
 
 
 
 


 
 
 
 
 
 
 
 

 

 

 

 

 

 

 

 

 

 
 
02/08/16

Landlord's Specificity

by Jeremy Jacob
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