Bournemouth landlords - What group of tenants should you target?

When planning to invest in property, there are a number of considerations you need to make; where to invest, how much to invest, how the investment will be funded, expected return on investment etc. But really, all of things result from the number 1 question you should be asking – who is my target market.

When businesses are formed, it is best practice to write up a business plan. The business plan can vary greatly in what it contains, but in essence it states what the business does, how much it plans to make, and who is going to buy the product/service. For the majority of property investors, only the first two elements are focused on – what you do (let out a property or room) and how much you plan to make (working out the gross/net yield). Far too often, the final element is only focused on once the property has been purchased – who is going to buy (who is the tenant). By then it’s too late.

I was having a meeting with an investor earlier in the week and we spoke about this very thing. Having a target market is fundamental as it helps you focus on where these tenants like to live and what types of properties they tend to rent. If anything, this one question can help form your whole Buy To Let strategy.

Bournemouth is quite an interesting market as it caters for every type of tenant; students, professionals, families, housing benefits, retirees. However it is very important to note that different areas of Bournemouth are more desirable for certain types of tenants.

Let’s say for example you were targeting the student market. You must consider that students will typically look for either accommodation close to the university, or close to the Town Centre. With that in mind, you then need to consider students are on a tight budget so having a top end flat asking for £1,000+pcm is going to be out of reach. Therefore you would be looking for Town Centre or close to campus property fairly low end (but clean, tidy, easy to maintain and functional) with an expected rental income of around £400 (room only) £550pcm (studio) £600 (1 bed) £750 (2 bed for sharers) as a guideline. You would also want to keep in mind the amount of new student accommodation that is being developed and whether that will cause issues with demand.

If you then compare that to what a small family would be looking for you would see many differences. Typically this group of tenants will be looking more towards a 2-3 bedroom terraced house/semi, with a fair sized garden. Their budget will be slightly higher but so too will their expectations so the property needs to be able to feel ‘homely’. The area that would appeal most to this group of tenants will be dictated around where the best schools are. This is usually outside of the main town and where possible away from student accommodation, but with good transport links and near the shops.

As you can see, understanding your target market is key to building your BTL strategy and if you get this wrong, it could be very costly.

So what tenants should I be aiming for?

This isn’t as straight forward as it seems because it depends on a number of different factors that are personal to you. Every investor will have preferences, but ultimately it needs to fit with what your investment goals are. Something I like to do in initial meetings with investors is find out what has bought them to wanting to invest and what their goals are. Some investors look for a long term capital growth property where yields are not as important as they want an asset to sell when they retire to bump up their pension pot. On the other hand some investors want a good net yield for a regular monthly income.

If you are currently looking to purchase an investment property, make sure you have considered who will ultimately be renting your property. Not only does this allow you to charge the optimum rent, it in turn delivers less voids and a greater return on your investment.

If you would like to have a free honest conversation about anything discussed in this article, or for any advice on the Bournemouth property market, please do get in touch. Send me an email at luke.marchbanks@belvoir.co.uk give me a call on 07979 123970 or lets arrange to meet up over a coffee.