Why are tenants becoming investors?

//Why are tenants becoming investors?

At first pass this doesn’t seem to make much sense but, with some tenants now fighting to get the property they want in the area they want, an interesting phenomenom is occurring. More and more of our tenants are seeking to become property investors.

It shouldn’t really be surprising because our whole focus is, and always has been, on targeting good properties in areas with the capacity for high growth and an undersupply of properties for rent. What that means at the moment is that we’re left in the enviable position of having more enquiry than homes for rent in some areas. Exacerbating that situation further, and again because we also target areas where there is a high population growth, many of our tenants are ‘buyers’ new to the region who take an interim 12 month lease until they can determine where exactly what and where they want to buy for themselves so, suddenly, we’re seeing a higher portion of tenants who have equity and understand property. You’d think that would be the crux of it but surprisingly, it’s not just these tenants who are looking to become investors.

Think about it… you’re looking for somewhere to rent; the best homes in the best estates are snapped up quickly and are few and far between. You see the area growing and the expanding infrastructure falling into place so you start to get a ‘feeling’ that ‘availability’ is likely to become a problem. You have two choices, buy a home to live in, get no assistance with funding that home or rent a far nicer home than one you can afford to buy and invest in a sound asset close by and have the tax man help pay for it. Better still, with the additional cash flow and growing equity you could soon be in a position to leverage and purchase a second investment property. Suddenly you’re now on a true wealth creation plan and that ‘dream home’ could easily be funded in the future by selling down some of your portfolio.

This is exactly what we’re starting to see. Of course, some of our tenants are doing both (buying a home to live in and an investment) as they identify the same reasons they moved into the area as being the same reasons others will continue to do so too… simple logic. When we’re offering packages in one estate $30,000 below what they could achieve if they went to the builder and developer direct then it starts to make real sense but more importantly, it’s living proof of the growing confidence and shrinking rental availability in some of our key target markets.

Now we’re not going to see all tenants run out and invest and rent to each other and the number of people who rent is continuing to grow, so there will always remain plenty of demand for investors. But, don’t you think it’s an important phenomenon to note when there is such bad press out there about the general market yet those who are actually in our specifically targeted locations can’t see anything but opportunity?… that’s proof, not someone’s opinion!

Let’s put it this way, we’re so confident of our research into these markets and the rental demand that we’ve expanded our Rental Assurance Program of ‘No Vacancy and No Arrears’ to 10 years including an initial minimum rent guarantee! Now that’s putting money where your mouth is.

So, whether you’re a seasoned investor, or just looking to start, maybe you should find out what all the fuss is about and at least ask your coach why we’ve got more tenants than homes to rent in some areas. As one of our investors commented back recently when we told them their property had been leased nearly two weeks prior to completion… ‘it’s a nice problem to have isn’t it!’

If you can see an opportunity in that, give us a call so we can stop turning good tenants away!

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