Real estate investors looking for strong cash flow and the potential for long-term appreciation need to look beyond the price tag and their own desires. The real aim is to find a rental property that can be easily rented to good-quality tenants — and the best way to do this is to figure out what your ideal tenant wants and needs. So what do renters really want? And how much are they willing to pay? We took a look at these questions with our new rental property trends report.
2019 rental property trends: what do renters want?
According to a new rental property survey, almost half (45%) of renter’s will pass on the new condo or the swanky modern townhouse for the privacy and space offered in a single-family home rental. Even more surprising is that another 31% would choose an apartment in a house over a unit in a dedicated apartment building (18%) and even over a condo (6%).
This preference for a house (or even an apartment in a house) over a condo should prompt real estate investors to seriously consider the type of property to invest in as part of a long-term real estate portfolio acquisition.
Another serious consideration in rental property trends is how much a renter is willing to pay in rent each month. More than a third (35%) of tenants are only willing to pay between $500 and $999 CDN in rent each month. Another 28% are willing to pay between $1,000 and $1,499 CDN in rent each month. Only 13% of renters are willing to pay more than $1,500 in rent each month.
Surprisingly, almost three-quarters (73%) of the survey respondents stuck to their monthly rental budget, while 19% managed to find suitable rental accommodation under their budget and the final 8% found a unit but had to settle for a monthly rent that was above their initial budget.
One of the biggest takeaways was the amenities that tenants considered to be vital versus the amenities that just weren’t that important — and how drastically different these criteria were when looking for a rental unit versus a place to buy.
For instance, 42% of tenants wanted a rental unit that was close to their work, while 34% sought out a rental unit close to public transit (more than one response was possible). At the same time, 65% of respondents didn’t consider a rental unit’s proximity to a dog park to be all that important. However, when considering a place to buy 46% said that a pet-friendly home was a must (along with 37% who wanted an updated kitchen, master bedroom with en suite, or a main-floor bathroom).
Quite surprisingly, almost half (47%) of renters did not consider an in-law suite or basement apartment to be all that important for their first home purchase. Another 36% were willing to compromise on the mountain, water or city view; 34% were willing to compromise on hardwood floors, while 30% were willing to compromise on whether or not a home had a patio or outdoor room. Instead, 34% would like to see updated furnace and A/C units as well as an open-floor layout in a home.
Sellers in the market to move up need to consider what’s important to current tenants, considering that 83% of the survey respondents that currently rent planned on buying a home, with almost half (41%) planning to buy in the next three years. As rental property owners, these are important considerations.
The key takeaway for real estate investors is to consider not just the purchase price of a rental property, but also the potential monthly rental, as well as the type of renter the unit will attract. These are some of the more important considerations from our rental property trends report. For instance, a home on a transit line that gets people close to a major employer may attract a larger number of tenants, then a condo unit in a potentially over-saturated downtown market.
The data used to determine these results came from findings of the Zolo Renter & Homebuyers’ Survey 2019, an online survey conducted between January and February 2019. The survey asked 1,854 North American respondents what they wanted in a rental unit and in a purchased property. The estimated margin of error is +/- 2.28 percentage points, 19 times out of 20.