Renter demographics are helpful, and you have undoubtedly profited from this information: average income, average tenants. Average real estate investing. There’s nothing wrong with being average — unless you’re ready to kick it up a notch.
That’s where psychographics come into play. Demographics tell you who your typical renters are. But psychographics probe the inner reaches of psychology, lifestyle and behaviour to show you why tenants prefer one property over another.
Take this example. Two of the best real estate websites, Homes.com and its sister site ForRent.com, dug into the minds of apartment seekers who scour the over 3 million apartment listings, and got a feel for who they are — and what they like. There is plenty of demographic information is this valuable survey: single women are the most common renters, there are just as many seniors renting as young professionals. This provides insights that will impact real estate investing decisions and marketing practices.
But rock stars need to know how to please a crowd.
The same survey also reveals that convenience is king when it comes to renting. Apartments win over single-family, in-unit laundry trumps nice finishes, and almost half of renters today live alone. That brought safety high on the list of must-haves across nearly every demographic.
You may be wondering why any of this matters. It’s because if you look at landlord psychographics, the chief desire is to be successful at real estate investing. To achieve that, you need to attract a rock-steady flow of excellent tenants — the kind that don’t cost you money — and, you need to attract these tenants at the lowest possible price point. You need to be popular.
If tenants come to you, you don’t have to pay to find them.
Here’s a great analogy: Let’s say you’ve decided you’re ready for a personal relationship — one that will last maybe 6 months to a year, maybe longer. You have two choices. You can do it the hard way by spending a few sweaty, awkward evenings dining with various people. Some will make you exceptionally nervous. They’ll be one you really like but who doesn’t like you. Others will be, well, let’s not go there!
Plan B is to join a speed-dating service, where you only have five minutes to size someone up. The beauty is that you can just get right to the point and ask the questions you really need to know the answers to, “Are you easy to get along with?”, “Are you able to pay your own bills?”, and “Are you a psychokiller?”
The more efficient your tenant qualification process, the lower your vacancy rate, and the higher your profits. If you start with a healthy pool of candidates, you greatly increase your chances of finding Mr. or Ms. Perfect For Now.
That leaves us with the question, “How do I find psychographics on my renters?”
There are some great real estate websites that provide psychographic profiling, including the apartment listing services — the same websites that you use to advertise vacancies. Those services track renter psychographics, and like to share their information with landlords and property managers.
One drawback of national surveys is that you lose the nuance of local preferences. A tenant in the muggy Midwest may be willing to sell her soul for air conditioning, but not so much farther north. One of the best ways to get psychographic info from local renters is to ask them.
You could hire a marketing firm that will poll renters in your area and give you a professional report. If you don’t want to toss money at it, just have your rental property management track prospective tenant inquiries and find out what most tenants say they are looking for in rental apartments. You want to know about prospects who turned you down.
Piggyback on someone else’s research and check out what your local competitors are doing. Most of this can be viewed clandestinely on the Internet.
Local newspapers are another great way to get into the heads of renters. What kinds of stories do the news agencies feature? You can be sure they’ve done their homework on what interests their readers.
Knowing what tenants want is a crucial skill in real estate investing, and it will improve virtually every facet of landlording, from knowing which properties to invest in to how to market those properties to prospective tenants. You’ll learn which amenities will close leases, and where your resources should be focused.
So, are you ready to rock?