Location, location, location is touted as the most important factor when determining the best place to invest. Like many maxims (e.g. “nice guys finish last”), location, location, is not entirely true. It’s nuanced.
For certain renters location comes second to amenities and landlord reputation, while other renters will forgo location for what I deem a necessity of life – dishwasher and balcony. Given this spectrum of “must haves”, it’s critical for landlords to think twice before investing in superfluous amenities that don’t improve the marketability of the property and, consequentially, the rental rate.
The Most Requested Amenity
The most highly requested amenity, according to ApartmentList, a US real estate data company, is en-suite laundry. Surprisingly, this isn’t offered in the most well-located New York apartments and, more shocking still, New Yorkers don’t mind. In fact, those renting in some of the best neighbourhoods are the least choosy of renters. They’ll deal with no washing machine or dishwasher if they’re close to work, restaurants and clubs. The emphasis on location over amenities suggests that the renters in New York’s hottest spots are likely single professionals who are free to galivant about free from the chains of laundry, dishes and childcare. Accordingly, if you’re looking to rent out your downtown Toronto condo, emphasis on local schools and playgrounds may not be a selling feature. It’s all about “the scene”.
When Location Doesn’t Matter
There is a second group of renters who, unlike our first group of “New York type” renters, don’t care as much about location. The second group is amenity driven. This group typically have families or, unlike “New York type” renters, they simply care less about their careers or frequenting the night scene. Interestingly, this amenity focused cohort typically has no post-secondary education or are employed in the trades. A sharp contrast with our New Yorker renters who are highly educated and focus on their career and party life. Despite these differences, both location and amenity driven renters agree on the most useless, but most prevalent amenity: cat-friendliness.
Pet-Friendly isn’t that Important
If you think that advertising your space as “cat-friendly” will increase viewings and attract creditable tenants, you’re wrong. There are more pet-friendly apartments than there are renters who have pets. According to ApartmentList, “[c]at-friendliness is the most common amenity on the property side, available in 52 percent of properties, but only 12 percent of renters are looking for a cat-friendly apartment, the smallest share of all the amenities we analyzed. Similarly, 48 percent of properties say that they are dog-friendly, but only 27 percent of users select this preference”.
The likely reason for this over-abundance of cat-friendly units and under-abundance of washing machines is cost. Pet friendliness involves no upfront cost but provides a perceived increase in flexibility on the part of the landlord. En-suite laundry, on the other hand, requires significant upfront and maintenance costs which may not be recouped if you’re a New York, or perhaps, Toronto landlord.
The Amenity in Demand, Regardless of Location
A positive landlord experience, according to most renters, is as important as washers and dryers and location. Landlords who fail to respond to maintenance requests promptly will lose high quality tenants who are too busy with family or the social scene to fuss when problems arise. In fact, some landlords assert that advertising the high level of their responsiveness to repair requests improves the number and quality of tenant applicants. If you don’t have some of the top amenities or the best location, provide a bespoke service and you not only secure better tenants, but a deservedly higher rent rate.
Depending on who you want to attract, location and certain amenities may be superfluous. As the US market researchers show, landlords assume that pet friendly will command more demand and, hopefully, more dollars for rent. The truth is that these assumptions can lead to over-investing in location or amenities and not reaping the rewards pursuant to higher rent-dollars. led to a poor outcome of matching amenity supply and amenity demand. ApartmentList reports that “[r]enters in 59 of the 70 metros we analyzed are likely to have difficulty finding all the amenities they want, be paying for amenities they don’t need, or, in the worst cases, both lack the amenities they want and pay for those they don’t”.
When thinking of listing your property for rent, it’s well cautioned to think twice about which amenities are most desired in your market before investing scores of money into a new kitchen or parking space. If all else fails, just be a nice landlord because the market has confirmed: nice guys don’t finish last.