As a property investor do you want reliable tenancy and good cash flow? Then this is important to you.
Knowing what tenants want and understanding what can help keep them happy, can be the difference between your rental business succeeding or failing. So what is critical in the eyes of the tenant?
Price
While the advantage of renting is that tenants can enjoy a more flexible lifestyle near important amenities like inner-city living, the vast majority of Kiwis still believe home ownership is important and something to aim for. Therefore the price they’re prepared to pay for a rental is a key consideration because they want to save for their own home.
There’s also uncertainty around future rental cost increases for most tenants (unless this is covered in your rental agreement – well worth considering). This means your tenants may want to budget towards a lease extension option when their contract comes due.
As the cost of purchasing a home for the average New Zealander has become increasingly less affordable, a significant percentage of NZ tenants remain in their rental for over five years now. It’s a win-win if both landlord and tenant are content with their place of residence.
Location
Before purchasing a house as a rental, think carefully about the kind of tenant/s you want. Location is always crucial and to some extent will determine both the amount of rent you can expect (ever increasing in some areas), and the demand for your property. This is where a property management company working in your city can be of great help since they know the market and can advise you on what to expect.
Students need easy access to their place of study, transport and shops (especially food!), while families will be looking for facilities like schools and the work commute. Young professionals generally like the 1-2 bedroom houses or apartments close to their place of work and city action. For single people and parents of young children it is particularly important to have their support networks nearby.
Number of Bedrooms
The number of bedrooms a rental offers is always very important, regardless of whether it’s a house or an inner city apartment. There's always demand for one and two bedroom living close to the urban centre.
According to the most recent NZ Census statistics, most tenants were living in three bedroom homes, but the demand for four-bedrooms had increased since 2006. This trend seems to be continuing. Renting by the room is another profitable investment solution to affordable living for the tight budget.
Certainly the more bedrooms, the greater the rent can be charged and the wider the range of tenants that this may appeal to, whether whole families, or groups of friends sharing. It is well worth considering shifting a wall, or converting a study, or attic space to become an extra bedroom.
Space And Storage
In addition to the number of bedrooms, a house that feels spacious with good storage is an important feature to tenants. Wardrobes are a must. Large built-in cupboards that reach the ceiling are particularly useful, utilising space well. Mounted carefully, mirrors on wardrobe doors will reflect light, creating the illusion of more space whilst leaving the walls free for furniture and artwork etc. Attic space is another storage bonus.
Generally students and new immigrants prefer to rent a property that is furnished, for obvious reasons, while families prefer the space to bring their own furniture and personal items to reinvent their own home.
Outdoor space - doesn’t need to be particularly large, whether a patio or garden - and in many cases a fully fenced property, are valuable features to most tenants, particularly for families with children. Kiwis do love their outdoor living, entertaining with the BBQ (when our weather permits!) but it’s best to have a section that is low maintenance otherwise this can create a lot of work for the tenant or landlord and can quickly deteriorate into an eyesore.
Co-operative Landlord
It’s very important to tenants that their landlord, or property manager, is quick to respond to them. If both sides can get on with each other and communicate well then their tenancy will work out. If you don’t have the time or patience for this hassle, then Dominion Property Management is the company for you.
Car Parking
NZ ranks in the top five countries of the world for car ownership, so tenants want to be able to park their car close to their place of residence - unless perhaps they’re living in the city centre, close to excellent transport.
Insulation/Heating
By law all landlords must disclose whether there is insulation in their rental house - where it is, what type and what condition it is in. From 1 July 2019 regulation ceiling and underfloor insulation will be compulsory in all rentals.
Wellington homes can get very cold in winter. You might want to consider installing a heat pump, which is economical to run and to discourage tenants from using portable gas heaters, which are hazardous and create considerable water vapour. It’s in the landlord’s best interests to provide a home that is relatively easy to heat as there will be much less likelihood of mould and deterioration problems developing.
Pets
Finally, it’s very difficult for tenants to find a place to live where a landlord will accept pets. We’re a pet-loving nation so if you were prepared to consider this option you’d have an advantage over others, including tenants that would be more likely to want to remain longer term.
If unsure you could negotiate on a case-by-case basis and include extra conditions, like increased rent, in your tenancy agreement to cover potential liabilities. You can ask what type of pet they own, how many, what size/breed (e.g. small or large dog), specify whether you would accept inside or outside pets and even meet them.
In conclusion, tenants are looking for much the same as a house buyer.
If you’d like further advice or assistance with the rental management process, get in touch with us at Dominion Property Management. We have the solution for you!