When deciding where to buy income properties there must be careful thought given not just to the tenants presently in the market area, but also the tenants that can be expected in the years to come.
“A Property Manager tuned-in to the trends can be a valuable source of this information,” says Brandon Sage of LandLord Property & Rental Management, Inc.
, who describes tenants as the cornerstone of a well-performing property.
“Make the wrong call and your property will not only sap your time but negatively impact your ROI,” says Sage. “Get it right and you'll be free to use your time elsewhere and benefit from a higher rate of return.”
To quote the Great One, Wayne Gretzky once stated: “I skate to where the puck is going to be, not where it has been.”
Investors do well to do the same when they buy to ensure not just that they get the best value appreciation over time, says Sage, but so that the tenants they rely on for income are desirable.
“For investors trying to determine where to buy, they really need to have a firm understanding of where good tenants are locating,” he says. “Every investor has been advised to buy where Starbucks goes, but I suggest following the influx of tenants which contributed to the area supporting a coffee shop in the first place.”
In other word, get ahead of the puck.
Ultimately the rental units being offered are products and as with any product there has to be a solid understanding of customer preferences and the trends.
Some of the major shifts currently underway are:
- Income levels are changing;
- Vehicle ownership is decreasing;
- Public transit use is increasing;
- Job stability is decreasing;
- Career mobility demands are increasing;
- Communication methods are changing;
- Market awareness and choice is increasing;
- Customer service expectations are increasing;
- Living space expectations are decreasing; and
- Family structures are shifting.
These changes are inexorably tied to wide societal changes currently underway that are changing how we live, work and play, says Sage; and there is no question this has an impact on where to invest.
“A shift I am very enthusiastic about is the growing preference among tenants across the GTA that rely on transit,” he says. “When full-day both-way GO train service commenced on the Lakeshore East and West lines, it resulted in a substantial improvement in our ability to find tenants near stations. The tenants we rent to overwhelmingly take the train, bypassing the GTA's grueling traffic so they can arrive at work fresh for the day and get home to loved ones in good time and good spirits.”
When it comes to trends, knowing where things are headed requires a firm understanding of where they have been. Property Managers are on the front line of these changes, says Sage, and so well-positioned to provide advice to investors that need to know the bigger picture.