Think about your market and what tenants you will get
We always like to think about our tenant market very carefully – and if you are in the landlord business you should too.
So we own and let mainly two bed freehold houses, always with gardens , mostly in South East London and North West Kent.
We know this market very well.
Our places are not massively up market nor down market. All are clean and well maintained.
Quite a few are ex local authority houses – these all are well built and have good sized rooms and bags of storage space, compared to modern flats and Victorian conversions.
95% of our enquiries are from tenants who are not UK nationals. And 85% of these are people who hail from central and Eastern Europe – from as far south as Bulgaria and Romania and as far north as Lithuania and Poland. They are either couples or have a family with one or two kids. Most work in construction and hospitality.
The biggest national contingents are Lithuanians, Poles, Bulgarians, Romanians and Slovakians, roughly in that order.
With the plandemic, relatively few have yet headed home – which is something we are very pleased about. Those in hospitality have usually sought and secured other jobs.
We have very few British enquirers, but most British turn their noses up at our spacious ex-local authority houses, preferring drafty, noisy odd-shaped conversions or modern, tiny hotel-like rooms in purpose built flats.
Those British enquirers who are actually OK with ex local authority places tend to be the ones who are dependent on universal credit, which generally does not work for us, because the income they get generally fails to meet our 2.35 times the rent target.
And even when they meet our target income, their bank statements usually reveal they are already overdrawn, which means they cannot afford a deposit, let alone give us comfort they can afford to actually sustain the tenancy and pay the rent on time, each and every month.
The tenants we have had from central and eastern Europe generally tend to be quite handy – they can fix a sticky drawer easily, enjoy decorating and looking after gardens properly. They tend to be very tidy too.
Most importantly, they tend to stay a long time, which is what we want, because like any landlord, we dread all the work that comes with having to re-let. (The image of rapacious landlords evicting established tenants for new people who can pay higher rent is a fiction of some on the left who have no understanding of how this market really works).
These days, when I market our property online, we get deluged with enquiries, most of which are from time wasters.
So, now, I simply send an email setting out what we will need to see from each applicant – proof of ID, proof of income of 2.35 times the rent, 3 months bank statements, a decent credit score and a previous landlord reference as a minimum.
It is just not worth phoning them. There are always simply too many enquiries to bother doing that. Most of the applicants will not have read the advert properly and so will not realise that we don’t accept pets and will require proof that their income is 2.35 times the rent.
So the email sets out these conditions again. And it invites them to call us if they meet our criteria. We then do the viewings.
Typically we will get 50 enquiries for each property we have available to let. Of these, there will be between 2 and 5 sets of people who will come to viewings.
If we have to show more than five sets of people, we have clearly priced the property wrong and the rent is too high, but this is a very rare occurrence as we always aim to price very competitively in the first place. Generally, I aim to be at least 5% cheaper than the cheapest rental 2 bed house in the entire main postcode area.
My approach seems to work and keeps the time factor down to a minimum. After all, I did not quit wage slavery to work too hard.
But the key is to also understand the market, what tenants I will get and what they want.
Your market may be very different and your tenant group of a completely different hue. But you must know even before you buy what kind of tenants you are likely to get and how much demand there is.
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