07 May Happy tenants
One thing that most investors want is to have happy tenants who are going to stay in there for a long period of time. In today’s show Miriam Sandkuhler, from Property Mavens, explains how having a view of the end tenant you want in an investment property has helped her.
Kevin: A lot of things to do when you’re buying an investment property, and one thing that most investors want, of course, is to have happy tenants who are going to stay in there for a long period of time. One way to make sure that you do that is by making sure that you pitch the property to the tenants you want and who are going to best fit that particular marketplace. This is a topic I want to discuss with Miriam Sandkuhler.
Miriam is the author of a great book I’ll tell you about in just a moment but also the founder of Property Mavens. They are buyer’s agents. The book itself, which is a great read – I read it some time ago – is called “Property Prosperity: Seven Steps to Investing Like an Expert.”
Miriam, great to be talking to you again. Thanks for your time.
Miriam: Hi, Kevin. How are you doing?
Kevin: Good. In the intro there, I was talking about happy tenants. I know a passion of yours is that you make sure you buy for your tenant demographic. Tell me a little bit more about what you mean by that. How do you go about doing that?
Miriam: It’s about having an understanding of the type of property that you’re after and what your objective is. If you’re looking for a capital growth property, you want to be able to hold that property for the long term, so you need to attract a tenant who’s going to be prepared to rain checks on you, so you have to factor in what’s going to appeal to that particular tenant.
For example, if I’m buying property for clients in Ballarat, and they might have a cash-flow strategy, I know that generally Ballarat is a really cold climate, so we always want exceptionally good heating in the place, we want insulation, because that can be the make-or-break as to whether or not the tenant will rent the property.
Again, if you want to appeal to a family, you need to make sure you have decent size bedrooms; good storage; there’s a garage, maybe a shed. Whereas if you’re appealing to maybe professional singles or a couple, you might not need all of that extra space or storage. By understanding who your market is to rent the property, you can make sure that in your buying decision, you’re taking that into account.
Kevin: One of the important things as an astute investor is to make sure you’re not buying from the heart. Always use your head and think about these things logically, Miriam?
Miriam: Absolutely. It’s about being practical. It’s not about self-referencing. It’s not about whether you like the property or whether you would live in it. Again, it comes back to understanding that demographic.
The other thing I’ve found, too — and I’ll use Ballarat as an example again — is that it’s a totally backwards market in some respects to, say, Melbourne. When you’re buying in a regional town where you think everybody wants to be close to cafés and shops and within walking distance, that’s not necessarily the case, and if you use that framework and apply it to a different area, you can very easily make mistakes.
Again, you need to do your research in the areas in which you’re buying to understand who the tenants are, what they want, and what you need to provide them at a minimum to ensure they’re going to rent your property from you at fair market value.
Kevin: What’s the best way to do that? Is it to visit the area and talk to some of the locals, talk to the agents, and see what people do?
Miriam: Talk to the local property managers. Do your research in your area. Understand what the population is made up of, what the job opportunities are, the usual growth drivers, your infrastructure fundamentals, why people are going there, and then by talking to the local property managers in the area, specifically maybe identifying suburbs that you’re looking in, they can give you an indication of which sort of tenant tends to live in what particular suburb and what the drivers are for them to be there.
For example, some suburbs may have some great primary schools or a great high school or great private school in that particular suburb. That will give you an indication of who would want to live there and who your likely tenant will be, whereas other pockets might, again, be very close to the city or the CBD area, and they might be prepared to pay a premium for a property within a block or two of the main drag, so they can walk to those areas and enjoy that lifestyle.
Kevin: Great advice there. That comes from Miriam Sandkhuler. You can contact her through the website at Property Mavens.
Great talking to you, Miriam, and we’ll catch up again in a few weeks’ time. Thank you.
Miriam: Thanks, Kevin.