If there’s one thing tenants and investors have in common, it’s why they choose their rental properties. The chosen location will benefit both parties differently, but the reasons for that decision are still fundamentally the same. So why do tenants choose to rent in a particular location? Well, unlike an investor, tenants have no interest in financial return on the property, so their motivations to rent in a prime location point to lifestyle preferences over financial gain. Although the irony here is that it’s their lifestyle preferences that ultimately create market hotspots for rental properties. So, these are the five main reasons why tenants prefer certain locations over others.
1. Strong employment growth
Money makes the world go round, so people will always go where the jobs are. For this reason, locations with a diverse and long-term employment base will see a higher concentration of residents. Rental properties are popular among people who’ve recently transferred for work and are still establishing themselves in a new area. Some communities, like mining towns, will experience a boom in the property market, however, once the employment base declines, so too will the property market. Therefore, people will generally seek to live in locations where there are plenty of job opportunities and stable employment growth.
2. Established infrastructure and facilities
There’s a reason cities and large regional towns draw in the crowds, and it’s not just the jobs. Ever since civilisation first emerged in Ancient Mesopotamia, people have congregated to the central hubs of society. This is because living in close proximity to established infrastructure and facilities helps build our social, cultural, and economical systems, and provides convenience for our day-to-day activities. Facilities that offer major benefits are schools, day-care centres, hospitals, banks, shopping centres and government support services. Therefore, correctly priced rental properties that are within close range of any of these facilities are always in high demand from tenants.
3. Thriving community
It’s not just the buildings and places that attract people to certain locations, it’s the people and community. Micro-economic facilities like parks, cafés, corner stores and takeaway shops are all keystones for a thriving community. It’s here, in well-established communities, where people like to live, socialise and raise families. Community centres such as RSL clubs, surf clubs, bowls clubs and other social activities mark a growing and engaged community. These are all important aspects that tenants consider when choosing a rental property location.
4. Access to transport
As the density of population and infrastructure increases, transport can become an issue for many people. Therefore, renters often have to consider their proximity and accessibility to highways, entry and exit routes and public transport. The most desirable rental properties are those that are close to bus stops, train stations and even airports (although not so close that associated noise becomes a problem). Communities that are isolated from central locations are often less desirable due to the length of time (and sometimes expense) required to travel to and from major locations.
5. Natural surroundings
Although oftentimes a subconscious decision, people are naturally influenced by their surroundings. The natural infrastructure of a location can be a contributing factor to where a person decides they want to live. It’s not uncommon for tenants to rent a property near the beach, overlooking a valley, or even somewhere determined by climate, simply because that is where they find enjoyment. While natural surroundings won’t be likely to compensate for heavier-weighted factors, they can still have a positive or negative impact on the property market.
There can be a number of reasons why people choose to rent in a particular location, and these are by no means the only ones. However, ultimately, it usually comes down to the most economical solution that ticks the most relevant boxes for employment, family, and social obligations.
- As any investor knows, the success of your investment requires comprehensive knowledge of your market. Real estate is no different; it is an investment property, after all. Therefore, knowing your market means knowing what features tenants really want in a rental property. We’ve done the research and the results are…