Property Investment
Should I allow pets in my rental property?
More property investors allow pets in rentals ... but what's the risk?
Property Management
5 min read
Author: Laine Moger
Journalist and Property Educator, holds a Bachelor of Communication (Honours) from Massey University.
Reviewed by: Ed McKnight
Our Resident Economist, with a GradDipEcon and over five years at Opes Partners, is a trusted contributor to NZ Property Investor, Informed Investor, Stuff, Business Desk, and OneRoof.
Many potential investors worry about what their tenants will be like.
And for good reason. Our investment properties are valuable, and some are worth close to $1 million.
So, it’s natural to pause and think about the sort of person who will live in it.
Will they look after the property, or will they trash and disrespect it?
When this happens, it’s easy for our minds to make quick (inaccurate) judgments.
In this article, you’ll learn what the average renter looks like (based on data). That way you’ll get a good feel for what your potential tenant may be like.
Two of our favourite investing hot spots here at Opes Partners are:
1) Addington, Christchurch
2) Henderson, West Auckland
Historically, these two areas have had a middling reputation. So, it’s easy for our minds to run away with stereotypes.
Will the tenants be unemployed or degenerates? (That’s what some investors ask us).
But here’s what your tenant is most likely to look like, according to the data.
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Book your free sessionGenerally, prospective tenants in Addington are pretty wholesome.
Tenants tend to be younger than people who own their own homes. 46.8% of tenants are aged between 20 and 34, compared to only 21.8% of owner-occupiers.
This makes sense because younger people may not have the deposit or income to buy their first home, so naturally they’d be renters.
Most renters aren’t in flatting situations. That surprises many first-time investors.
Only 17% of households who rent are in a flatting situation.
Most renters (51%) are single families. More on this below.
And a third of renters (33%) live by themselves.
Let’s break those one-family households down a bit more. What do they look like?
Generally, these renters are couples, or couples with children. Together, these groups make up over three-quarters of all single-family households.
That’s similar to people who own their own homes.
The big difference between homeowners and renters is the proportion of single parents.
Raising kids on your own is hard (and costly) so it’s not surprising that single parents with kids are more likely to rent.
On top of this, some single parents may have lost the family home during a relationship break-up. Naturally, they rent.
And as expected, renters tend to have slightly lower incomes than owner-occupiers. That is partially because people with higher incomes can afford to buy a house.
But, it is also because renters tend to be younger so haven’t got the money to buy a house (yet).
While there are lower-income renters in the suburb, the most popular household income band is $100,000 – $150,000.
Almost 19% of renters in Addington earn 6 figures (as a collective household).
The data suggest that your property in Addington is most likely to be rented by:
In Henderson, tenants tend to be significantly younger.
This is likely due to the higher cost of living in Auckland. Because rents are higher, teenage children (and young adults) are more likely to stay at home.
Unlike Addington, you are less likely to rent to a couple only. You’re more likely to rent to a couple with kids or a single parent, with children.
Incomes in this area are higher than in Addington. There are fewer people on very low household incomes. 19.2% of renters earn $100k-$150K as a household.
But that doesn’t mean every tenant you get will be good (or bad). Let’s go through two case studies to see the experiences property investors may have.
Here's a case study of Sandra, an investor who settled a property in Auckland.
Sandra appointed a property manager to look after her investment.
And the manager accepted the application of a single mum, on a benefit.
The manager admitted taking a bit of a chance on this lady, but it’s been hell on earth for Sandra. It’s hard being a recently-single parent.
The long and the short of it is, the mother could not afford the property.
By the time Sandra brought in the Tenancy Tribunal to force an eviction, there was $5k of rent in arrears. Ouch.
Now, does this mean that every single mother is a risky tenant? Absolutely not.
Most of the time, single mums are hard-working people like everyone else. They want to pay their rent, to keep their kids warm and safe.
And some of the time, if they are on the benefit, WINZ pays the rent directly to your account.
But there are times when things go wrong. That’s where you want to make sure you have a good property manager.
They need to ask the tenant for evidence that they can afford the property, because ultimately this wasn’t a good situation for the property investor or the tenant.
One of our team here at Opes rented a Christchurch property to 2 young university students. The pair were friends in their early 20s.
On paper, this could sound like a risk.
Young women, throwing parties and spending part-time job wages on beer instead of rent.
But when the investor tagged along to a rental inspection the property was immaculate. The investor couldn’t believe how tidy it was … tidier than his place!
The rent was paid on time, and there wasn’t any trouble.
Does this mean that every single 20-year-old is going to be a great tenant? Absolutely not.
There may well be some tenants who live up to the university stereotype, but this shows that you can’t always rely on the stereotypical picture that comes to mind.
While you want to avoid bad tenants … the majority are (relatively) problem-free.
Opes Partners Managing Director Andrew Nicol says most of his tenants haven’t caused him grief. That comes from renting out to about 100 of them over the years.
The problem is, you only ever read the headlines when something goes wrong.
There’s never going to be a headline saying:
“Tenant always pays rent on time” or
“Tenant left the property in an immaculate condition”
You’ll seldom read a Facebook comment from a property investor talking about their great tenants. Because they don’t cause problems, there’s nothing to worry about.
Yes, some people are indeed dodgy.
And there is always going to be a percentage of tenants who are bad, but most tenants are good, hardworking people who want to get on with their lives. They just aren’t in a position to buy their own home yet.
Journalist and Property Educator, holds a Bachelor of Communication (Honours) from Massey University.
Laine Moger, a seasoned Journalist and Property Educator with six years of experience, holds a Bachelor of Communications (Honours) from Massey University and a Diploma of Journalism from the London School of Journalism. She has been an integral part of the Opes team for two years, crafting content for our website, newsletter, and external columns, as well as contributing to Informed Investor and NZ Property Investor.