Investing 101: How to Attract Peak Tenants
Amongst increasing interest rates for home buyers throughout Canada, many eligible purchasers are taking their business to the rental market.
Before 2022’s rate hike and market correction, investors throughout the GTA took advantage of cheap borrowing rates and filled the real estate market with investment purchases. As a result, investors dominated the market with properties ranging from pre-construction and new construction to resale condos, townhouses, and detached homes.
Now, amid a market that many buyers are hesitant to engage with, property investments are turning into highly desirable rentals. Meanwhile, average rent continues to increase throughout the GTA while turnover rates decline – renters are moving in to stay.
Owning a rental property can be highly advantageous, especially if you find quality renters in it for the long haul. The hard part, of course, is finding renters that you can trust and who reflect your values of property maintenance to the highest standard.
In short, quality rental properties with quality landlords attract quality renters.
Let’s look at some rental conditions, advertising guidelines, and landlord recommendations to help you find the best renters for your property!
The Rental Property
The first step to finding quality tenants is investing in a property with essential qualities to attract top-of-the-line renters. Here are some key markers that make a rental property worthwhile.
1. Neighbourhood Quality & Safety
The quality and safety of your rental’s neighbourhood dictate the lifestyle your renters intend to live.
Think about your standards of living – would you move into an unsafe area, or would you prefer to put a bit of extra cash into moving into a safer, accessible, and amenity-filled neighbourhood?
Your rental neighbourhood doesn’t have to be perfect, but the more safe, engaging, and beneficial qualities it has, the more likely you are to attract residents with aligned lifestyle standards. Before investing, diligently research crime statistics and neighbourhood news to confirm safety standards.
2. Access to Transportation & Employment
As mentioned above, your rental property will first and foremost attract tenants based on its location. Renters favour properties that are highly accessible by main roads, highways, and public transportation, especially if the area allows them to easily commute to local grocery stores, shopping, restaurants, and most importantly, work.
When investing in a rental property, you must consider where potential renters may work and what type of tenants you will bring from that location.
For example, rental properties in Oshawa, ON, will likely attract people who work in Oshawa or Durham Region since Oshawa has a longer commute into the city. Alternatively, if you have a rental property in Pickering or Port Union, there could be a chance that your renters are commuting into the city, Scarborough, or even North York. In turn, your rental price point for a location where commuters go into the city or nearby urban neighbourhoods will differ from the price point of a far-out suburban property.
3. Move In Ready with Upgrades & Appliances
High-value upgrades make for high-value homes, which attract high-value tenants. Strategic finishes such as granite countertops, fresh paint, hardwood flooring, upgraded bathrooms, and stainless appliances can take your rental property from reflecting a mediocre lifestyle to a luxury lifestyle.
Remember, your rental property is an investment. Investing in upgrades or including appliances such as a refrigerator and washer/dryer can allow for a price increase that makes sense to your renters. Additionally, including upgrades and appliances ensures your renter that they are choosing a quality property from an investor who has done their due diligence to make the property as livable as possible. Providing a livable, move-in-ready space shows your property maintenance standards, thus hopefully attracting tenants who share the same values.
Advertising
The second step to finding eligible, peak tenants is advertising to the best of your ability! Renters will not know your property is available unless you tell them. Here are some helpful tips to streamline your tenant search.
1. Identify Your Target Market
If you have invested in a property, you likely know about the area and what type of people typically buy into it. Capture an idea of the dwellers your rental site attracts and understand what kind of tenant you would like to pull from that pool.
For example, perhaps you’ve purchased a two-bed one-bath condo in mid-town Toronto. This area is highly accessible by public transportation, includes various outdoor and indoor amenities, and tends to attract younger city dwellers, including singles, couples, and sets of roommates. Based on this information, what special features would you need to advertise to entice a younger audience, and where would you direct your advertising?
2. Set a Price
Look at similar rental properties in the area and create a reasonable, comparable rental price that evenly reflects the neighbourhood. Remember that setting the price too high for the area may limit the number of interested tenants, so consider this before investing money into pricey upgrades that may take your property out of the market.
3. Advertise Appropriately
Once you have set a price and have an idea of your target market, it is time to advertise to eligible renters in their spaces.
Using the best possible photographs, you can create physical listings which may be posted on telephone poles, in cafes, on university campuses, in libraries, or wherever you see fit based on the location. In addition, online networks such as Facebook Marketplace, Kijiji, Craigslist, and Zolo can also serve as high-value advertising mediums that efficiently reach a large digital audience.
Best practices for advertisements include:
a) Show the best quality photos of the rental property, including all upgrades and mentions of included appliances or special features. If possible, invest in a 3D tour to provide potential renters with interactive online access to your property.
b) Highlight nearby amenities and include information about hot spots and experiences in the area – advertising your rental must go beyond the property alone! You need to sell the location, including attractions, shopping, grocery stores, restaurants, and access to schools.
4. Open Houses & Rental Signs
Having a good old open house for your rental property can bring in an array of eligible tenants to look at the property without the pressure of commitment. Open houses allow potential renters or neighbourhood locals to view the property, and even if you don’t receive immediate offers, you’ve at least opened the door for word-of-mouth marketing.
Similarly, rental signs with a number to call at the front of the property, throughout the neighbourhood, or on main roads will inform pass-byers that the property is for rent and may create buzz within the community. Remember that if someone is interested in renting in your area, they likely pass through the neighbourhood on a scheduled basis – posting physical signs can draw attention that online advertisements may not capture!
The Landlord
Lastly, attracting excellent tenants means that you need to present yourself as an outstanding landlord! Great landlords offer mutually respectful relationships with their tenants by providing a healthy line of communication. Here are some tips for creating the best experience for potential renters as a landlord.
1. Listen Up!
Paying close attention when prospective residents speak about their wants, needs, and past experiences can give you an idea of what type of renter they are and how your values may align or misalign with theirs. In most cases, potential tenants have rented elsewhere in the past – you must ask about these experiences and note how they describe their involvement with past landlords and rental spaces. How do they recount their relationship with their last landlord? Are their stories positive or negative? Do they seem open to a healthy working relationship with you, or did their past experiences tarnish their perspective of landlords? Listening in for crucial markers of their viewpoint towards renting and landlords can help you understand what type of tenants they are and if they are the kind of individuals you would have a smooth renting experience with.
2. Do Your Due Diligence
Speaking with potential renters about their renting past can be helpful, but they will not provide you with all the details. Reach beyond your renters and contact their past landlords to understand their tenant behaviour better. Furthermore, speak with their employers to gauge their employment status and to confirm their job stability. Remember, without employment, your renters may struggle to meet ends, so you must verify their security. Lastly, do a credit check for confidence in their financial ability to cover rental costs routinely.
3. Keep it Professional
There is a high chance that you may find tenants you get along with tremendously! Since you are renting out YOUR space, it is common that you search for renters that are easy to get along with and share similar values, standards, and even interests and hobbies with you. You may find that you have a fantastic relationship with these people as they are easy to get along with.
While you should keep a cordial and comfortable relationship with your renters, you must also stand firm with your boundaries as a property manager to ensure they do not take advantage of you or your property! Remain fair, friendly, and understanding to their needs, but be sure to make your rules clear and remain professional throughout your interactions to avoid mishaps that may affect your property or relationship with your tenants.
4. Look the Part
As a landlord, you are responsible for providing your renters with the assurance that their living space is in the hands of a respectable individual. Potential renters look at more than just your property… they also look at you! Dressing the part and adding a professional, together touch to your appearance can give your tenants confidence that you are trustworthy with efficient management skills. A few extra professional touches can go a long way!
5. Be Honest
Honesty is the best policy when it comes to being a quality landlord. Be transparent with your tenants about your property’s boundaries, rules, expectations, and conditions. Be sure to highlight what is and is not included in rent and honestly communicate the accessibility of nearby amenities. Full disclosure of all necessary information on the property and neighbourhood can save you the hassle of displeased tenants. Eventually, they will discover anything you choose to hide, reflecting poorly on you and your renter/landlord relationship.
Finding the best tenants for your rental property can be a tedious and lengthy process but putting in the work to secure quality residents can go a long way! Take your time, meet with multiple prospects, and do your part in ensuring that the process is smooth for both your potential renters and you.
Remember – investing is the first step, but surely not the last! Owning a rental property will benefit you if you can find proper renters who deliver rent on time, take care of your property, and communicate.
