RENTER DEMOGRAPHICS AND
Copyright 2002-2014 Landlord.com
By Bob Cain
2000 Cain Publications, Inc., used by permission
Why is it important to know the
demographics of your customers? Knowing income levels, marital status,
familial status, ages, etc. of the tenants in each of your properties will
certainly help in tenant selection. But it will also show you how to serve
your customers, your tenants, better.
How does that help you? In
my seminar, "How to Make More Money on Your Rental Property" we
go through an exercise in describing your rental property and who rents
from you. That helps you to create your rental criteria and do better
tenant selection. But there's more to it than that. If you know who
your existing customer base is, and the people who are going to rent your
properties, you know the kinds of services to provide for them and the
kinds of things they will expect to stay a long time, and to continue
paying you rent and making you money.
That's why the figures
that we are going to look at from the Census Bureau are important.
The large management
companies and apartment owners spend a lot of time analyzing their
customer base, because they know that knowing who their customers are
makes them more profit. For example, Equity Residential Properties Trust,
owner of more than 140,000 apartments nationwide, commissions detailed
demographic studies of the customer base in local markets that it serves
or is considering entering. To them, these studies are sophisticated tools
for target marketing of apartments, just as businesses target markets for
other goods and services.
By the end of this
article, you'll be able to analyze your customer base, figure out what you
need to do to attract those customers, the kinds of things they are
looking for and their expectations as renters. We'll also look at some
future trends so you can look at where you want to take your rental
property and the kinds of customers you want to attract in the future.
The three types of
renters, broken down by income are the "Affordable Housing"
renters, the middle-income renters and a new category, the
Something to keep in mind
here is that renters of apartments in larger buildings are different not
only from single-family renters, but also from renters of units in smaller
plexes. But keep reading this article if you own only single-family
rentals and smaller plexes.
While you are not
competing directly with the large apartment complexes, since those renters
don't rent houses or duplexes, you can see the trends that affect that
market, some of which spill over into yours. Population changes can also
affect the number of people who will be looking to rent apartments as
opposed to single-family or small-plex units.
Like other housing types,
multifamily rental housing offers consumers a unique package of housing
attributes. Apartments, for example, can provide a combination of physical
features, location and affordability not available in single-family rental
structures or owner-occupied housing or any type of structure. Those
features determine for the most part the sorts of people who will live in
Studies show a remarkable
diversity among apartment renters. Apartment renters, especially in
relation to homeowners, tend to be younger, of smaller household size,
with more moderate incomes, and more ethnically diverse. However,
apartment renters cover the full spectrum of demographic and socioeconomic
characteristics, as you can see in
Nearly one-third of all
apartments are rented by someone under 30. At the same time, apartments
are home to many seniors, especially when looked at as a share of all
seniors who rent.
Household size is what
most distinguishes apartment residents from others. Single people make up
almost half of apartment households. Single women living alone account for
over half of this group and 26 percent of all apartment households. That
makes them the single largest household type in apartment housing. Nearly
one-quarter of all apartments are home to families with more than two
members. Unrelated roommates make up another 14 percent of apartment
It is mostly apartments
that provide "affordable housing" to 7 million households with
annual incomes below $20,000. Yet another 2 million apartment households
have incomes over $50,000. And 30 percent of apartment renters’ incomes
exceed the national median.
A 1997 study found that 34
percent of apartment renters moved in the previous year, compared with 32
percent of other renters and 6 percent of homeowners. You can associate
frequency of moving with age, since 53 percent of apartment renters under
30 moved in the previous year. Many households choose rental apartment
housing because they are going to move in a year or two. Renting provides
a relatively low cost for move in and move out, as compared with buying a
About 15 percent of
households, on the other hand, stay at least four years in an apartment.
And for between 10 and 15
percent of the US population, renting is a way of life: they may change
where they live, but they will always rent. The upshot of that is while
your apartment community will experience turnover, you will see little
change in the types of individual and family residents.
Since tenants are going to
move anyway, the composition of the residents of an apartment property and
neighborhood is what is important, not how long they live there. You are
going to get the same type of folks in an apartment over and over and over
With that information in
mind, how do you best serve each of these income types?
The "Affordable Housing"
Though the housing is far
from "affordable" for many of these folks, this is the segment
of the rental market that is getting the most attention from the federal
government. Many of these renters are what you would call
"assisted," meaning that they are assisted in paying the rent by
some government program or other.
They tend to be older and
more likely to have at least one child living with them. They may even
have large families. Most interesting is that since their rent assistance
is dependent upon residence in a specific property, they tend to stay in
one place longer than other apartment renters.
How can you serve them
most effectively? Lower income apartments are more likely to have a
problem with crime than are middle and lifestyle apartments. That means
the more you can control criminal activity in the apartment complex, the
happier your good renters will be. While they may tend to stay in an
apartment longer than other income levels of renters, what will get them
to move is crime and fear of crime. You have to take a firm stand against
crime in these complexes. That means no tolerance whatsoever. Your good
tenants will appreciate it and stay longer.
Lower income tenants also
sometimes don't think rules apply to them, just to everyone else. Either
that or they are constantly trying to "get away with" something.
That means you have to constantly be on top of what is happening in your
property and strictly enforce the rules. The bad tenants will resent
strict enforcement of the rules, but the good tenants will welcome it.
That means bad tenants may move or just act sullen. Either way, you won't
be having problems with them.
It will require constant
vigilance, though, because at the first sign of weakness, the
troublemakers will be back at their old games.
By far the largest segment
of the apartment rental market, comprising about 37 percent of all
apartment renters, this is a group many of whom could afford to own their
own homes, but choose not to. Their median income almost matches that
necessary to buy a starter home, but they have chosen for one reason or
another to save their money, spend it on other goods and services, or
invest it in something other than housing.
Some of the other
apartment renters making up this segment are in what you would call
"transition." They could be recently separated or divorced,
changing jobs, or just graduated from school and looking to move to a more
stable life. Renting is easier than buying for this group. Often what they
are looking for is a relatively inexpensive and trouble-free place to
These folks move more than
apartment residents in the other two categories and tend to be younger. In
fact people under 30 living alone make up 10 percent of the middle market,
with an additional 15 percent of the market consisting of under-30
Mature women constitute a
significant piece of this market. Women living alone over the age of 30
are 12 percent of the market segment. Many women choose apartments because
apartments provide a sense of personal security not available in
How do you serve this
group best? They have their own lives to lead and apartment living
requires less hassle with their place of residence than does other kinds,
such as single-family and small plex renting. These are busy people, often
not spending much time at home. If they aren't working, they are at social
functions or other activities. That means that whatever you can do to make
living convenient, they will appreciate.
To help the single women,
always keep an eye out for security issues. Lighting, parking lot
security, key and lock security and other similar issues are uppermost in
the women's minds.
Responding quickly to
repair problems will keep the under-30 tenants happy. After all, all they
want to do when they come home is have everything work properly so they
can go about their business. As you may have noticed, they will be the
most vocal about failure to take care of maintenance problems. The
landlords who take the best care of them will be the ones who have the
fewest problems and actually keep them the longest.
This is the group that
rents because they want to. Their average annual income exceeds $62,000.
They can be defined as
meeting three criteria:
1. They are old
enough to be established in the labor force and do not have to move every
year or two for jobs or school. Some 87 percent of them are 25 or older,
with the average age being 42.
2. They have
adult interests and schedules. Some 69 percent are either single or
married couples with no children under age 18.
3. They have
enough money to buy a house, and, indeed, may once have owned one.
These are the renters who
want service. The more you can make the lifestyle renter communities like
a five-star hotel, the more they will like it. Some large apartment
complexes offer such things as concierge service to take care of
everything from getting the oil changed in their cars to getting theater
tickets. In addition, they want all the amenities in their apartments.
Some will even spend their own money to decorate them exactly the way they
want, all the way from wall-to-wall carpeting to expensive chandeliers.
Especially if they sold
their home, the group of renters wants to enjoy life. They may travel a
lot and don't want to have to worry about a house while they are gone.
They might even consider the staff as their employees, expecting them to
jump when they call.
Considering the amount of
rent many of these folks pay, they could well have the right. These are
people whom you must treat as valued customers and do the things necessary
to keep them satisfied with where they live.
Look for more renters in
the coming 10 to 20 years, not just as an absolute number, but also as a
percentage of the population. As the baby boom population ages and their
children leave home, some will opt for moving out of their homes and into
apartments that require less upkeep and allow them the freedom to do what
Their children will also
become renters as they attend college and after they graduate from either
high school or college and before they begin raising families.
The middle-income and
lifestyle renters will come to expect better and better service. As
landlords we have to always be on the lookout for ways to provide it.
Robert Cain is
a nationally-recognized speaker and writer on property management and real
estate issues. For a free sample copy of the Rental Property Reporter call
800-654-5456 or visit their web site at www.rentalprop.com.
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