As an investor it makes sense to select a property that appeals to tenants. But what do tenants really look for in a rental property? Our 2022 Property Sentiment Report reveals the answers.
Success in property investment is a sum of many parts. On the one hand, it’s about finding the right property that’s going to meet your long-term growth expectations.
Equally, however, it’s also about ensuring that your property appeals to tenants, and that you’re generating enough rental income to support your holding plans.
Even in today’s tight rental market, tenants are selective about where they choose to live. And on top of this, you also need to consider your property’s long-term rentability.
So, what drives a tenant to choose one property over another? We reveal what tenants look for in a rental property according to our 2022 survey responses.
The leading factor driving tenant demand
Our Property Sentiment Survey, which was completed by over 780 respondents across Australia (23% of whom were tenants) showed that one factor in particular dominates the preferences of tenants – and that’s the location of a property.
An overwhelming 72% of tenants in our 2022 Survey highlighted location as being among their top three considerations in selecting a rental home.
Second on the priority list of what tenants look for in a rental property was size – ranked by 62% of respondents as one of the three leading factors they prioritise.
From there, a variety of different factors jostle for tenant appeal. These include availability of outdoor space (26%), internal storage space (25%) and whether the property comes with appliances such as air conditioning or a dishwasher (24%).
What do tenants look for when renting?
What can we learn from the survey findings?
Doing your due diligence and establishing what tenants want in a rental is crucial to maximising your rental returns and the long-term capital growth of your property.
“If there’s one thing we can take away from this, it’s that investors need to select a location with care”, notes Amanda Kroczek, Team Leader of our property management division.
“Investors may be able to enhance the appeal of a rental property for a relatively low cost by adding extra storage space, installing popular appliances, or completing minor enhancements. But location is one factor that cannot be altered.”
Importantly, location doesn’t just drive tenant appeal and rental income. It can also be a key driver of capital growth. This matters because our Property Sentiment Survey found six out of ten (60%) property investors are seeking a mix of both capital gains and rental income in their property investment strategy.
What should investors look for?
According to Amanda, locations with a track record for delivering healthy rent returns plus capital growth tend to share common features. These include:
- Good transport links to the city and local employment hubs
- Walking distance to local shopping precincts
- Waterfront areas including the river and ocean
- Green zones such as golf courses and parklands
- Proximity to education institutions including schools, TAFE campuses and universities.
“These features don’t just appeal to tenants,” explains Amanda. “They also appeal to owner-occupiers. So when an investor goes to sell, their property will appeal to a broad range of buyers as well.”
The right suburb selection is critical
At present, Perth’s rental market is highly competitive. But investors should take a long-range perspective when selecting a property.
“Buyers who make an informed decision about their choice of location can benefit from stronger performance across all aspects of their property – rental income, minimal vacancy periods, and long-term capital growth,” says Amanda. “This is what success as an investor is ultimately all about.”
Recognising locations that will help to meet your individual goals as an investor is an area where it can pay to partner with property experts. This especially applies when investors buy in an area they are unfamiliar with – be it outside their local neighbourhood or interstate.
It’s also an area where the collaboration between our buyer’s agents and property managers can bring significant benefits to our clients at Momentum Wealth.
“The collaboration between our in-house teams enables us to combine our expertise to help our clients identify properties that perform well in all these aspects – with a location and features that appeal to tenants, plus the potential for long-term capital gains,” Amanda concludes.