As a buy-and-hold investor, I’ve come across tenants of all walks of life. Bachelors, single mums, share-house friends, retirees, young families and so on. I thought I’d had a taste of every type of tenant possible. But then I realised, this is incredibly naïve. The truth is; the diversity of the rental pool at any given time is as limitless as the diversity we find in humanity. So, I recently had my own little ‘witching hour’ of property insight recently with one such tenant.
With almost eight billion people living on planet Earth, there is a practically infinite volume of lifestyles that people can live, making for so many different types of tenants that one could attract to their property.
Today I thought I’d share one such ‘out there’ example.
I recently acquired a new investment property that very much ‘added up’ for me. As in, after much due diligence on the area itself, the property itself, and some crunching of numbers, I made the decision to purchase the property.
This decision was made, despite the appearance of the property, which was, how do I say it… a little ‘kooky’. Upon looking at the property ad online, the property clearly appeared to be inhabited by, well… a practicing witch…
– Gothic statues hung above the kitchen cupboards
– Animal skin rugs, an Eastern European throne chair, hanging Native American dreamcatchers, and many, many candlesticks adorned the living area
– Dolls, fairies, tepees, more dreamcatchers, a witch’s hat, and mystical ‘witching’ elements appeared in the bedrooms
To most prospective buyers, the creepy appearance of this property would have been enough to turn them away. Clearly, the price of the property, which was slightly below market rate for such a property in the area, was compensating for this appearance.
But to the trained investor; looking a little deeper under the surface of things can sometimes fruit some great surprises. Upon further investigation, I discovered that:
– The appearance, whilst full of kooky knick-knacks, was pristinely maintained. Not a speck of dust, not a single mark on the tiles, the floors squeaky clean. Clearly this tenant at least went to a great deal of effort to make the property appear clean – at least for the sale
– Why did the tenant do this? Turns out that she has been living there for 10+ years, and had no desire to move out anytime soon. She clearly treated the property like it was her own, owned home. Another positive in my book
– I also learned that the tenant had been ok with incremental rental increases (in line with market rate) over the years, another good sign for the investor
– The body corporate of the property checked out well, as did the building & pest inspection. The townhouse was in a small complex, at the back of the block, avoiding the noise of any nearby roads
The point to highlight in amongst all of this is that sometimes the quality of a tenancy applicant, or a tenant you may ‘inherit’ when you take ownership of a property, needs to be judged beyond any perceptions you have about that person, based on their lifestyle.
I couldn’t care less about what a tenant in my property does in their personal life, so long as they comply within the requirements I maintain, when seeking a good tenant. These things are:
– On-time payment of rent always; and understanding/respecting the odd occasion when rental rates need to increase in line with the market
– Not damaging the property and generally looking after it
– Reporting malfunctioning appliances, or maintenance works required; as/when they come up
– Respecting common property areas and neighbours nearby
– (Ideally) looking to stick around for as long as possible
If you have employed a highly skilled and competent managing agent to look after your property; they are the ones to make the best guided ‘judgement call’ on the quality of any particular tenant.
At the end of the day, astute investors need to draw up a list of the things that actually matter, when seeking quality tenants, and look beyond initial perceptions, when weighing up tenancy selection decisions.