Ever get the feeling that you’ve suddenly gotten older? Don’t worry, it’s not you. The number of young renters is increasing — and that has some landlords feeling outdated.
Millennials — 30-year-olds, give or take five years — are quickly becoming a significant renter demographic. In a few years, it is projected that one in three rental applicants will fall into that category. Millennials already are throwing their weight around, and landlords need to come up to speed.
Retailers have been quick to identify this trend, and ad agencies have tossed research dollars into finding ways to appeal to these consumers. As a result, we now know a lot about them. That’s fortunate for landlords, because most millennials rent rather than purchase homes.
There are two important characteristics that trend for the generation that grew up on role-playing video games, online courses and smartphones: These renters are highly social, and highly visual.
Millennials feel the need to express their opinions and share their experiences with total strangers online. Social media has become a sort of collective consciousness for young people. They make decisions within a much larger and geographically diverse community than generations prior. Ratings and reviews matter.
While millennials are not the largest group of renters, they tend to be the most vocal. Landlords need to monitor these tenants more carefully or run the risk of developing a bad online reputation, which can sink a rental business.
This demographic of renters expects to find everything they need to know online and usually with their mobile devices. They need graphics to get the message, like property photos or a video tour.
Image is also important to millennial renters. Curb appeal and location will win over price or square footage. You may not be able to sell a millennial renter on a bargain, but you can sell mobility and access to nearby amenities.
Millennials, transitioning from their parents’ standard of living to the realities of the current job market, have high expectations. This demographic expects to buy a home someday, but right now they want the flexibility to follow job opportunities. They also expect to live well while saving for a home, and to move up as fast as their income allows. For landlords, setting limits is key.
So is checking tenant credit, because high living standards and entry level income can lead to overextending credit on lifestyle purchases. Unrealistic expectations coupled with inexperience create a perfect storm. Things can take a bad turn very quickly.
Apartments are still the preferred housing option for millennials, so apartment managers may see an even higher concentration of applicants from this demographic. These renters are looking for locations that fit their free-form lives, and that will win out over the condition of the rental property.
But landlords beware: Just because this tenant signs the lease on a poorly maintained rental property, don’t think they won’t complain persistently or detail the bad condition of the property all over the Internet, discouraging new renters.
Eyes always on their phones, millennials would love to do everything online — find an apartment, tour the apartment (there are apps for this), fill out an application and sign the lease. While it’s tempting to try to keep pace with these technology-savvy renters, online leasing apps tend to be better for tenants than landlords. You lose the opportunity to speak face-to-face with your next renter and to expose inconsistent information.
While it’s great to court millennial tenants by switching to online ads, setting up a website or Facebook page so tenants can access house rules, the lease or property information 24/7, and answering your phone when it rings, tenant screening is more effective when it’s done in person.
Here are some other tips that can help you mesh with millennials:
1. Rental ads should be visual. Stating the property has a swimming pool is not as effective as showing a photo of the swimming pool. Include as much information as practical, or link over to a flyer or web page that satisfies the desire to be online.
Where price is less an issue than location, describe the neighborhood in terms of what it has to offer, like public transportation, bike access or local shopping.
If possible, publish testimonials or references to win over millennial renters.
Most ads will be accessed via mobile devices, so make modifications to your ads if necessary. Most ad listing services do that for you, or at least show you how. Formatting options may be more limited, so put your effort into the wording and the quality of the photos, not fancy fonts, italics or bullet points.
Landlord Tip: Avoid discrimination claims by designing ads that attract any demographic, not just millennials. Avoid phrases like “great for a young person” or “singles”, and references to local churches or other organizations that may exclude some applicants.
2. Credit checks are a must in order to flag an applicant with desires above his or her means. Millennials may be carrying high student debt, but payments tend to be low. Defaults, however, are a concern that a credit report can expose.
3. Communication through social media is key for millennials. However, this is simply the vehicle for communication. Don’t try to “friend” tenants or speak their language if you’re not familiar with social media. It’s a mistake to set up a Facebook or Twitter account and then never use it.
Instead, educate tenants by offering helpful tips and rule reminders online, or via email or texts. The point is to communicate with the tenants, and to do so more frequently than you may be accustomed to doing. Simply being available to talk on the phone will go a long way. Twenty-four hours to return a call or email is an eternity. Routine email blasts, or even snail mail newsletters are better than ignoring tenants for months at a time. This very social group will take that as a sign that you don’t care. Invoicing rent and sending back rent receipts provide good opportunities to send along messages.
4. One of the reasons to stay in touch with millennial tenants is the likelihood of life changes occurring during the term of the tenancy. You can consider shorter leases or early termination provisions that minimize income loss should your tenants need to relocate for work, buy a house, rent a better place, or get married. Alternatively, you can draw your line in the sand and make sure your tenant knows the limits.
Landlord Tip: Any leasing policy you apply to a millennial renter must also be made available to all other renters.
5. Internet connectivity may be the single most important amenity for this demographic. Also important: bike storage, gathering areas for entertaining friends, and recycling centers.
6. Electronic payment methods are preferred. The more options you offer for digital payment, the more likely you’ll get rent on time.
7. Put your maintenance dollars into curb appeal. These renters care what their friends think when they come over.
8. Set limits. Be sure to prequalify this tenant to make sure the individual is ready to move and can afford the rent before you spend time touring the property. Make sure that tenants understand the importance of paying rent on time, following the rules, and developing a good rental history. Relate it to their goals — to build good credit and a good reputation as a tenant so they can move up. These tenants are education-oriented so they easily can be trained to follow the rules. However, setting limits is especially hard if you are a millennial, too. Hold yourself out as the expert and maintain that position of authority or tenant/peers will take advantage of you.
9. If millennial renters had their way, the entire leasing process would take place online and you would never meet. It is wise to avoid online self-tours and rental applications because of a lack of accountability. The anonymity will encourage false or misleading answers, and prevent the tenant from taking the obligation seriously.
10. Watch what’s going on online. What are tenants saying about you or the property? Ad listing sites may offer a comment notification feature, or you can apply a free Google Alert by choosing keywords like the property address. You will be notified when that address appears on the Internet, on website that you may not be familiar with. Be careful not to use keywords that are too broad — like “rental property in Ontario” — or you’ll get swamped with alert messages.
Typically the best strategy for bad online press is to answer a negative comment or rating by explaining your side of the story. This social group of renters can be forgiving, and will decide for themselves what they believe.
While it can be uncomfortable to change your pace, you will find that these leasing strategies will appeal to most renters, not just millennials, save you time, and provide you the opportunity to maximize the profitability of your rental properties.
This post is provided by Tenant Verification Service, Inc., helping landlords reduce the risks of renting with fraud prevention tools that include Tenant Screening, Tenant Background Checks, (U.S. and Canada), as well as Criminal Background Checks, and Eviction Reports (U.S. only).
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Disclaimer: The information provided in this post in not intended to be construed as legal advice, nor should it be considered a substitute for obtaining individual legal counsel or consulting your local, state, federal or provincial tenancy laws.