One of our rules is that we like the property to work as both a single let or a multi-let property if possible. This therefore means that if you were planning for the property to be a multi-let rented to students for example, that it would also work financially as a single let, should it have to for any reason. Now on this basis you would have two tenant types available, potentially a family and students. However we like to adhere to this with all properties where we can.
If we use our portfolio as an example, then we have properties that we could rent to an LHA family (a family on housing benefits), a private family who are working, or even potentially a company let or HMO (House of Multi Occupancy. If it is a HMO property we could rent to either students, working professionals, or potentially a company let. Therefore on all of our properties we are aiming for as many different potential tenant types as possible, which minimises the risk of voids.
Another example would be if you was to buy a four-bed property at £110,000 and rent the rooms individually, you would likely make in the region of £350-£400 per month per room in the Coventry area, based on current rents. This could be a main strategy, however if for any reason you could not rent the rooms individually, then the property would still wash its face as a single let, or make a smaller cash flow. Whilst this is not ideal, it would not be a complete disaster if you were to buy a bigger property at £200,000, as it would likely not work as a single let and you would have to rent the rooms individually to be profitable. This is just something to think about and the more tenant types you have available the better it is to minimise risk.
Aiming for more than one tenant really minimises your risk when investing in property. Whilst you may have a preferred tenant type which you should aim for, making sure there are other options if needed would ensure you are safeguarding your investment over time.
For more information and an in-depth insight into the world of property investment, take a look at the Embrace Property: The Key Secrets To Property Success by Peter Iwaniszewski.