This is a column by real estate guru Rachelle.

I attended the Tenant Demographic panel at the Canadian Apartment Investment Conference on September 15th, 2010. The presenter was Michele Sexsmith, Vice President & Practice Leader – Retail, Real Estate & Restaurants at Environics Analytics (link). Environics provides research and demographics to help select where to place stores & restaurants. They help buildings determine who their target market is, how to keep tenants happy, and how to offer suitable amenities. They start their research using the census, add data from different sources, and the result is so granular they can tell you who your target tenant is, using your postal code.

There are many different groups of people; however, renter households are mainly represented by four groups. Each group has different wants and needs. If you can target your marketing, leasing, renovations and design to your tenant in a seamless way, you are more likely to be successful. Your tenant will be happier, like a round peg in a round hole.

Grads & Pads

These tenants have the highest disposable income (about $73K per year), they live in high rises, they are well educated and they love to shop at higher-end stores. They love beautiful things and aesthetics are important to them. They believe in government. About 37% of their income goes to housing. They have social values and community is important to them.

If you’re renting downtown condominiums, this is the group you’re renting to. Make sure you point out any “community” activities in the building. You’ll also want to get this group to pay their own utilities; their average annual spending on utilities is $1100. Big screen televisions, computers, and expresso machines use a lot of power.

Rooms With a View

These tenants do well for themselves: their average salary is about $57K per year. They tend to live in older housing stock, like apartment buildings. They are attracted to crowds, and want to be close to the downtown action. They have a high education level but reject authority. These people are deal shoppers. They spend about 38% of their income on housing.

If you’re renting the upper floor of your house, close to public transit but off on a side street, walking distance to the shops and festivals, this is likely your target market. They have a sense of personal responsibility and like to give back to the community. Don’t worry too much about their utilities, they use about $505 per year.

Newcomers Rising

This tenant group is fairly young and is composed of new immigrants. Their average income is about $56K, but they have children, so they have less disposable income and try to get by on the minimum. They are trying to get more educated or get relevant Canadian experience. They spend 41% of their income on housing. They are very conscious of the global village; they are disoriented in their new home but pursue aspirational goals. They want to stay with their cultural roots but also assimilate; they feel strong ties and want information about where they come from. They spend on computers.

If you’re renting outside the downtown core, this is who you’re renting to. They tend to rent in buildings with other newcomers: they’re looking for roots. These tenants feel a tremendous amount of time stress; they’re working, raising kids, getting an education and trying to better themselves. They use a reasonable amount of utilities, about $785 per year.

Single City Renters

This is the lowest income group. They tend to live in low-rise apartments in older housing stock. They are single parents with one or two kids. They are financially challenged. They spend about 39% of their income on housing. They are flexible about family roles and commitments. They are politically very liberal.

Newcomers in this category rent outside the core, the rest rent downtown, close to public transit and amenities. They like small local businesses, but also Walmart. Their utilities usage is about $793 per year. If you’re renting a basement apartment close to public transit, this group will rent from you.

Uses of Demographic Information

Next, Kevin Green, CEO of Greenwin Property Management (link), and Robert Herman, President of Robinwood Management Corporation (link), commented on the different applications of this information and how they use it in their income properties.

Greenwin manages properties that house all these types of tenant groups, and Mr. Green spoke about dealing with their needs. Specifically, in buildings that house new Canadians, he sees that they are scared of the police, and that there are gangs that come from their countries of origin. He brings in social programs for nutrition, jobs and English as a second language. Security measures are implemented to deter violence and keep residents safe.

For the higher income groups, buildings are competing with condominium rentals. In these buildings Mr. Green will offer yoga, movies, exercise rooms, concierge services and theater tickets. He also mentioned that the newer condos can’t compete on space; rental suites are much larger than new condos.

Robinwood Management Corporation deals mostly with the “Grads & Pads” and “Rooms With a View” demographic groups presented above. Buildings catering to these groups have been hit hard as home ownership became an attainable alternative for them. Vacancy rose and rent prices have gone down. Mr. Herman’s biggest challenge is attracting and keeping good tenants.

How to Use Demographics in Your Rental Property

I’ve rented a lot of properties in different areas; this presentation really crystallized and focused what I already knew but never quite managed to quantify. I will be using this in my business, both with my advertising and my showings. I will be emphasizing certain attributes and amenities of properties I never would have thought to before.

For instance, with the downtown condos, I’ll be listing any community groups or events in the buildings and spend extra time waxing poetic about the design and beauty of the building and apartment. I’ll also be mentioning how close it is to any festivals or crowd centered events along with the usual description of the apartment.

For properties outside the downtown core, I’ll be emphasizing proximity to any universities or colleges, ESL schools, plus any cultural or community centres. I’ll even say “new Canadians are welcome” in my ads; this always seemed too bold before, but for those renters who do suffer from discrimination, this will be a welcome relief. I’ll also be highlighting any time saving benefits of the location, as well as amenities for children.

For Landlords

Landlords might also want to use this information to decide if a renovation is likely to pay off or attract a more desirable demographic. For instance, I know a lady who put high end kitchens and gorgeous hardwood floors in an area that attracts only “Newcomers Rising”. Her rentals are priced about $400 more than others in the area. It doesn’t work well, and she continually has problems finding and keeping tenants.

For Investors

I have found that landlords tend to have an easier time managing their properties when they and their tenants have a close cultural and experiential background. For instance, if you are a former “Grads & Pads”, tailoring your purchases to properties that appeal to that type of tenant will make a lot more sense than purchasing a property with a target market of “Newcomers Rising” or “Single City Renters”. You’ll naturally make decisions that will benefit your clientele because of your inherent understanding of their wants and needs.

Spend some time, think about the location of your property and the potential tenant demographic group. Target your advertising and renovations, and give your customer what they specifically need to keep them happy and renting in your property.

Good Luck!

Editors Note:  Out of curiosity, if you’re a renter, which demographic are you?

About the Author: Rachelle specializes in renting property on behalf of landlords and is the blogger behind Landlord Rescue. She also works with investors to find good investments in Toronto and surrounding areas. Her passion is bringing multi res properties back from the brink and maximizing profitability. Check out some of her other real estate posts on MDJ.

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