- Joined
- Nov 17, 2010
- Messages
- 174
So, what is a "B Tenant"? "B Tenants" are generally hard working lower-middle class people trying to get ahead. Here are 3 reasons why they're great for our Real Estate business.
They're saving up for a home
While you may be thinking, `how could that be good for our business!?` it really is! If they are thinking about buying a home in the near future, it means they will be watching their spending as well as improving their credit. The less "toys" your tenants are buying i.e BMW's, big screen T.V's, etc, the more money they have to pay their rent. Something every investor wants, am I right?
It also means they are career minded and are focused on their employment. Talk about sleeping a little easier at night. It's all about attracting a particular type of tenant and filtering out the rest.
They stay a while! (But not too long)
These particular tenants generally stay for 2-3 years, and that's exactly what we want. You may be thinking, "How is that good? I don't want to be dealing with tenant turn overs every few years". And while you may be right, having a new a tenant every 2-3 years isn't the worst thing in the world, and here's why.
In Ontario we are capped at 2.5% for yearly rent increases. If you have a tenant stay for 5-10 years, the "market rent" could far exceed your minimal increases of 2.5% per year. (On average it's $20-$30 per year for a Single-Family home here in KWC). So, when the tenant moves out in 2-3 years it gives us the chance to whip through, make small repairs, clean and throw it on the market at a much higher rent. Remember, our strategy is to completely renovate the property when we FIRST buy it so we generally only have to make small repairs and clean for the next tenants.
Don't get me wrong; if a tenant decides to stay for more than 5 years, I definitely won't be beating down the door asking them to leave. We already know the REAL money is made in mortgage pay down. So if they decide to stay, great! If they do follow the pattern and leave after a few years, awesome!
Largest Pool To Choose From
The majority of renters fall into the lower-middle class bracket. This means that if you're catering to this type of clientele, you will have the largest pool to choose from! *Hint Hint* - To give you an idea, great Single-Family properties here in KW/Cambridge attracting these types of tenants are Townhomes, Semi's and Detached Homes renting from $1250-$1350 per month plus utilities.
Buying higher end properties that rent for more is not a bad thing, but becomes too expensive for the lower-middle class tenants. These rentals tend to attract higher end tenants, which can also be a great business to be in. But that's just it. It's a different business!
Remember how I always say to buy properties that fit with YOUR goals and lifestyle? This would be the time to decide which clientele do you want to serve? Both have pro's and con's. "B Tenants" will come and go and can give you more headaches if not properly screened, but there will ALWAYS be a high demand for these renters if you're buying in great areas. "A Tenants" or, high end tenants, tend to stay much longer and can make your business very easy as they are generally much more sophisticated. The down side is it may take a while (1-6 months or more!) before finding that right tenant. So, which business fits your lifestyle and goals? Let's chat and I can help you decide.
For more investing tips and blogs, stop by my website.
They're saving up for a home
While you may be thinking, `how could that be good for our business!?` it really is! If they are thinking about buying a home in the near future, it means they will be watching their spending as well as improving their credit. The less "toys" your tenants are buying i.e BMW's, big screen T.V's, etc, the more money they have to pay their rent. Something every investor wants, am I right?
It also means they are career minded and are focused on their employment. Talk about sleeping a little easier at night. It's all about attracting a particular type of tenant and filtering out the rest.They stay a while! (But not too long)
These particular tenants generally stay for 2-3 years, and that's exactly what we want. You may be thinking, "How is that good? I don't want to be dealing with tenant turn overs every few years". And while you may be right, having a new a tenant every 2-3 years isn't the worst thing in the world, and here's why.
In Ontario we are capped at 2.5% for yearly rent increases. If you have a tenant stay for 5-10 years, the "market rent" could far exceed your minimal increases of 2.5% per year. (On average it's $20-$30 per year for a Single-Family home here in KWC). So, when the tenant moves out in 2-3 years it gives us the chance to whip through, make small repairs, clean and throw it on the market at a much higher rent. Remember, our strategy is to completely renovate the property when we FIRST buy it so we generally only have to make small repairs and clean for the next tenants.
Don't get me wrong; if a tenant decides to stay for more than 5 years, I definitely won't be beating down the door asking them to leave. We already know the REAL money is made in mortgage pay down. So if they decide to stay, great! If they do follow the pattern and leave after a few years, awesome!
Largest Pool To Choose From
The majority of renters fall into the lower-middle class bracket. This means that if you're catering to this type of clientele, you will have the largest pool to choose from! *Hint Hint* - To give you an idea, great Single-Family properties here in KW/Cambridge attracting these types of tenants are Townhomes, Semi's and Detached Homes renting from $1250-$1350 per month plus utilities.
Buying higher end properties that rent for more is not a bad thing, but becomes too expensive for the lower-middle class tenants. These rentals tend to attract higher end tenants, which can also be a great business to be in. But that's just it. It's a different business!
Remember how I always say to buy properties that fit with YOUR goals and lifestyle? This would be the time to decide which clientele do you want to serve? Both have pro's and con's. "B Tenants" will come and go and can give you more headaches if not properly screened, but there will ALWAYS be a high demand for these renters if you're buying in great areas. "A Tenants" or, high end tenants, tend to stay much longer and can make your business very easy as they are generally much more sophisticated. The down side is it may take a while (1-6 months or more!) before finding that right tenant. So, which business fits your lifestyle and goals? Let's chat and I can help you decide.
For more investing tips and blogs, stop by my website.
