What do millennials look for in their multifamily apartment rentals?
What do investors such as yourself analyze most closely when investigating potential multifamily property purchases? Is it loan terms, interest rates, and fees? Is it the potential cap rate of the property? Is it the potential capital expenditures or rehab needed to stabilize the property?
All good questions to ponder, but how often do you think about your potential tenants? What are they looking for in an apartment, and more importantly what can you be doing to entice them to choose yours? Analyzing these questions will lead to lower vacancy rates and may reveal ways you can increase rents over the long haul.
So how do you answer these questions?
In many markets, millennials and younger members of the workforce are going to make up a good percentage of your tenants because the vast majority of them don’t have access to capital to purchase a home. Younger workers renting is nothing new, but the length they are remaining renters is increasing. A CNBC article from this summer stated that the “second quarter of 2019 spiked 11% from a year ago. That, in turn, pushed rents up an average 3% nationally to $1,390 per month.” Meanwhile, about 12% of millennial renters plan to “always rent”—more than the 10.7% that said the same last year, a new Apartment List survey found.
With that large of a group in the market for multifamily rentals, investors need to ask what they can do to attract these potential tenants. We did some polling of the young professionals that we work with and work for us. The results may surprise you as to what they really feel are the must needs.
We heard this one a lot. They didn’t want valet service or covered parking spots. They just wanted a spot close to their door. And preferably a spot that doesn’t cost extra. In addition, many renters voiced frustration that they only get one spot for their unit, when they may have two to three people living there.
This one surprised us. There is some fluctuation as to what “good” means because not everyone shares the same grading scale, but the demand for quality appliances was high. The young workers we polled wanted appliances that at least look like they are less than 15 years old. Washer and dryers on site are a plus.
The extra money you spend on monthly pest control appears to be a way to get tenants to pay more monthly. Tales of roaches and other bugs fly fast on social media sites, so being proactive on pests is key. Even being strongly reactive when issues happen will go a long way toward happy tenants. Regular pest control service may even be something to include on your marketing material.
We’ve written several times on this blog about the need for finding a good management team for your investment. That fact that millennial renters mentioned it often emphasizes that need.
What else came up besides those big four?
- Proximity to parks and greenways ranked relatively high
- Cost: the word affordable was often used
- Pets were hit or miss – some wanted pet friendly, while others complained of neighbors with noisy dogs
- Safety was mentioned, but not with any specific details
These insights into the minds of renters can help you, whether you’re evaluating a multifamily property or looking for better ways to manage your current portfolio. If you’re ready to take the next step with multifamily investing, contact us—we’re happy to discuss options from loans for new purchases to cash-out refinances that help you maximize leverage.