In general what is the most profitable tenant demographic?

Question

I currently own 2 properties: a duplex and a single family home. I’m looking to buy my next one and had this question come to my mind. In general, is there a specific demographic that is most profitable as tenants? If so what is it?

Karen F. · Answer

Highest return on investment, but highest aggravation, is class C multifamily, in not great areas, but not in horribly dangerous inner city areas.  Tenants that pay on time without any problem?  The older man with a good steady job, and an old narcotics conviction from 20 yrs ago, a number of Hispanic families with steady jobs, and who understand that you're supposed to pay your rent every month, an older Hispanic gentleman who is paying about 80% of market rent (we inherited him when we bought the building) and is so grateful that he pays BEFORE the first of the month, a very well organized AA woman with kids and a job and Section 8.  Biggest problems have been young adults renting for the first time in groups who don't understand that they have to pay the rent, and worst of all have been ANYONE who came with an agency (other than straight Section 8) or coming out of a homeless shelter.  Every single person who has previously been in a homeless shelter, or comes with the help of a social service agency, has been a nightmare whom we've had to evict within a few months.  Every single one.  Basically, if they ever wound up in a homeless shelter, or needed a social service agency to help them find an apartment, there was a reason, and that reason makes them impossible to house.

Bjorn Ahlblad · Answer

@Nathan Shankles for me it is the thoroughly screened demographic, and has money!

Syed H. · Answer

Clean people who pay. Every demographic has people that do and do not meet that criteria.

Dylan Earl · Answer

Every demographic has it's pros and cons.

- Students, short term, can be messy and careless since it's short term... however parents usually always make sure rent is paid.

- Young/Mature adults - Reliable, little more caring and responsible. Their next move is dependant on their career and/or relationship... you may have someone who has friends come over a lot, girlfriend/boyfriend move in with them OR they move away for new job or buy a house

- 35+ people - hit or miss really. Depending on their financial situation, career path, family situation etc, you never know. Usually responsible enough to make sure rent is paid on time and house is clean/in order.

I've rented to all 3 groups and more. It really depends on the person not the demographic.

Best of luck!

Jasmine Hu · Answer

Nice thread. Just curious, in downtown Baltimore area, say nicer location with single professional, will it be easier to rent 2br or 1 br? The price difference between those two could be $1100 vs $1600. in this case, will you buy 2br facing roommate situation or 1 br? Which case would be better? I assume there will be economy downturn before 2022. We are close.

I have seen 2 br shared by couple and single. Young professional yet messy. They do pay rent though, just can't keep up with property, could clog the toilet.

Thanks for your input!

Nancy P. · Answer

For us,  it's the single professional who lives alone,  age 28-35.  Never need repairs except for things that are at the end of their lives anyway,  never clog the plumbing, never piss off the association,  rarely have dogs  (since they work a lot.)  But they stay maybe 3-4 years and then purchase.  But they all willingly obey the lease terms that say I can show it the last 30 days (many other tenants have made it impossible and have therefore lost their deposits).  They like a 2 BR to have a home office.  I don't think I'll ever branch out into bigger properties.

John Underwood · Answer

I agree with @Bjorn Ahlblad properly screen your tenants and you should be fine. A background check and credit score speaks volumes about a potential tenant. Sometimes there are valid reasons for a low credit score that can be considered.

Matt P. · Answer

@Nathan Shankles it'll be different for everyone but I have done well with older folks on fixed income or multi generational families, you know a mom in her 50s daughter in her 20/30s and a few school age kids.

Dennis M. · Answer

Woman 25-35 in healthcare / medical field has been very positive for me . Single Guys that make decent  money doing blue collar jobs have not been best in my experience because they are prone to heavy drinking unemployment and child support draining their income .

David Barnett · Answer

@Nathan Shankles First and foremost, I wanted to say that if the tenants qualify after screening and meeting minimum criteria, I accept them.  Two out of my three properties are in B to B+ areas and my properties appeal to the following demographic.  Usually, 25-35, single, young professionals that want to live in the urban core.  I wouldn't say my tenants are hipsters, and maybe one step below.  I've found this niche to be fairly profitable, and on the two properties in the B to B+ areas, I haven't had a turnover in three renewal cycles.

In general what is the most profitable tenant demographic?

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