Our series on keeping a competitive edge for property owners and property managers continues this week with a focus on understanding your current and potential tenants. Why do renters rent? Possessing a thorough knowledge of the motivations behind your target market will make you better able to cater to their needs and thus maintain high occupancy.
In the past the general consensus for why people rented was because they were unable to buy, typically because of the lack of funds or credit. Whether that was true or not at the time, it certainly isn’t the case now. There are a number of motivating factors in the decision to rent, and yes, money can be one of them, but the others are much more complex and understanding these factors is important in staying competitive.
Your first step in finding out why your tenants rent is to ask them. You can encourage them to fill out an optional anonymous survey, even offer a monetary incentive for doing so, that asks them to give you insight on why they have chosen to rent. This could very well give you the best insight into your target market’s renting motivations. From there, consider these other reasons why people choose to rent rather than own:
Mobility and convenience. These two factors are increasingly gaining momentum as the deciding forces behind renting. The recent recession required of the unemployed to be flexible while looking for work. If a job was found in another state, a home could be a hindrance in getting there quickly to take it. But if the person is a renter? Not so bad. And, with more and more employment reports stating that it is becoming increasingly commonplace for employees to stay at companies no more than two years before moving on, it’s probably a safe bet that when they’re looking for a new position they may consider relocations as well. Renting allows workers to be more mobile in their careers, to avoid the hassle of selling a home, and avoid the upkeep costs of said home (and possible value loss).
Neighborhood. Especially in urban areas, an ideal neighborhood may be where apartments are big in number and the single-family home not so much. In the Bay Area, for instance, apartment living allows for individual to live in vibrant neighborhoods where the focus of development has been multi-family units rather than single. Some chose to move to the suburbs but singles, and those families that need/want to remain close to the hub, have a lot to choose from in terms of finding a match for their desired lifestyle. And developers have been responsive to the demand.
Time. Yes, buying a home takes time (and a lot of effort) but for the purposes of this blog entry, time refers to the time a homeowner must invest into the upkeep of their investment. And a lot of working people these days just don’t have it. I’m sure a lot of homeowners are inwardly groaning when something breaks and they have to break out of the DIY manual or shell out the cash to get it fixed rather than pick up the phone and call the landlord. That’s a major incentive to rent for the time-strapped.
There are other reasons why renters chose to rent (and remember to do your own asking around to uncover factors more specific to you), but these four factors came up again and again in our inquiries on the subject, so we feel it’s safe to conclude they are the ones to pay the most attention to when marketing your properties. Are they located in a desirable neighborhood? Do you have a reputation for addressing tenant’s concerns and property maintenance quickly and efficiently? (You should.) Do you offer flexible leasing options or maybe furnished apartments that attract those tenants with mobile lifestyles? Find out what is about your property that keeps your tenants happy and capitalize!
Jessie Williams, Marketing Coordinator