3 Types of Oakland Renters: How to Target Them & Why It Matters

Strong tenancies are the driving force of value for multifamily investments. A strong tenancy is the difference between reliably receiving rents on time vs. filing unlawful detainers; the occasional request vs. multiple trips to the rent board; normal wear and tear vs. thousands of dollars of damage.  Without strong tenancies, landlords are vulnerable to a host of problems and immeasurable loss of time and money – all of which directly threaten an investor’s cash flow and financial security. 

In today’s rental market, competition is at an all-time high for strong tenancies backed by quality, creditworthy tenants.  But with submarkets gentrifying across Oakland, and a new supply of luxury living entering the market, renters have an abundance of choice when searching for their next home which inevitably creates pressure on landlords.  With tenant-protection laws complicating matters, multifamily investors have every incentive to be more mindful – even strategic – when it comes to who they place in their properties (without discriminating, of course).

So who are the types of renters you should be targeting today, and how do you entice them to rent from you?  This month, we share the 3 types of renters you should be targeting – who they are, what they do, what they value – and how to position your property and align your messaging to stay competitive.

Fast-Paced Professionals

Fast-Paced Professionals typically relocate from larger cities, like New York or Los Angeles, or come from San Francisco to the East Bay to minimize commutes.  They are well-educated, high-income earning professionals solely career-focused with dreams of achieving C-Suite titles. This demographic are typically in the technology or medical sectors, and spend 65+ hours per week in the office, at meetings, or traveling across the country.  Because they live very busy, hectic lives, they value convenience above all else.  With an excess of discretionary income, Fast-Paced Professionals love luxury and hospitality-related services – anything that allows them to set their personal lives on automatic, so their time and energy can be better focused on employment tasks.

Owners of pristine buildings in highly desirable submarkets like Adams Point or Temescal can compete for this demographic. To do so requires a significant amount of capital to keep kitchens and bathrooms newly remodeled (must be the latest design trends!), in addition to other bonuses like wifi thermostats, keyless entry, bike rooms and secured mail room for packages and deliveries. 

Landlords who capture this segment can expect to receive premium rents above the $3500 threshold; peace of mind knowing rents are automatically deposited without issue; minimal wear and tear (since these tenants are never home); and a sooner-than-later vacancy when employment requires relocation to the next city.

Here’s how you target them:

MESSAGING:  Convenience & modern living without hundreds of other residents. Emphasizing this is critical - not everyone wants to live in hotel-like residences with people coming and going at all hours.

PRICING:  Landlords of older, multifamily buildings have to adjust their pricing slightly below luxury living rates - to expect otherwise will result in your unit sitting for longer lease-up phases and eventual reduction. The reality is these new developments were constructed to out-compete the existing housing stock with every amenity possible. A competitive price will sway these renters in your direction.

TIP:  Be ready for the comparisons. These renters typically hire professional relocation agents to scout properties, and their job is to find the best property for the best value. Pricing must make sense, otherwise they will quickly eliminate your property as an option.

Upgraded Savers

Upgraded Savers are typically late-Millennial or early Generation Xers (early 30s – late 40s) who currently live in Oakland and are seeking an upgraded change.  These “sweet spot” renters are arguably the most desirable demographic because income and employment are well-documented and steady, and credit scores are the highest. 

They value the character and charm of a specific neighborhood – primarily the small, local businesses like eateries and shops – and have zero interest in renting at the new developments in Oakland.  The Upgraded Savers believe in work/life balance, and spend the weekends leisurely strolling Lake Merritt’s farmers market, hiking the redwoods in Roberts Regional Park, or enjoying brunch at Grand Lake Kitchen or Lake Chalet.   

Unlike Fast-Paced Professionals who splurge on convenience, Updated Savers are prudent when it comes to their finances.  After years of being inundated with student loan debt and living through the struggles of the Great Recession, every decision requires careful and timely consideration – all revolving around their carefully planned short-term and long-term goals.  They view their tenancy as a stepping stone on their path to homeownership. In the meantime, they want to live comfortably without too much compromise.

Investors of well-maintained buildings in desirable submarkets – generally Piedmont Ave, Rockridge, Lakeshore, Adams Point and Cleveland Heights – have the best chance to win over these renters.  While this demographic does not have expectations of brand new kitchens and bathrooms, they do expect upgrades to have been made within 5-10 years.  They also expect landlords and property managers to demonstrate genuine care and maintenance of the property.  New paint, window blinds, and updated fixtures are important to them – and they despise carpet.  If you can offer them a beautiful, well-cared for space at a competitive price, they’ll buy in.   

With dreams of eventually purchasing their forever home, landlords reap the benefit of their financial prudence, in addition to tenancies lasting 2-5 years – the perfect balance of time where units can be updated and rents can be brought to current market rates.  This segment is typically very professional and clean, and you can rest assure minimal issues will occur during and after they vacate…(since they want every penny of their deposit returned in full). 

Here’s how to target them:

MESSAGING:  Updated, modern living without breaking the bank. The emphasis with this group is savings and location - especially if your property is within steps of Lake Merritt.

PRICING:  Currently, landlords of “updated but not new” units are being hit the hardest with the market’s rent stabilization. In previous years, these properties commanded the highest rents. With brand new units attracting their tenant base, significant discounts are a must.

TIP:  Read our October blog on Savings, Serenity & Safety.  The Upgraded Savers highly value all 3 of these factors, so drive this point home!

Affordable Budgeters

Affordable Budgeters are a sizable demographic – all ages, ethnicities, backgrounds, and employment statuses are represented.  Some are older and retired with steady, strict budgets.  Others are younger, recent college graduates or post-graduates with a lack of established credit history.  In general, this demographic lives on a fixed, low-to-medium income and typically lives paycheck-to-paycheck with minimal to no savings.  A good majority are hard-working service providers and laborers who know the value of the dollar and as a result, live very modestly.   

Excellent renters can be found in this segment, but risk is heightened since income can be less steady, unpredictable and often undocumented (think under the table wages like tips). 

This demographic has a lower expectation of landlords, and ultimately values affordable rent and responsiveness, especially when it comes to repairs. Complaints and requests are often minimal, and years can go by before you ever hear from them.   

Landlords who compete for this segment should perform proper due diligence with tenant screenings – credit may not be as strong, but look for steady employment and strong rental verifications.  If you lack the funds to make any upgrades, be sure to make spaces light and bright (LED bulbs instead of regular light bulbs), and of course, splurge on the deep clean.

How to target them:

MESSAGING:  Focus on affordable housing in prime Oakland locations. Many renters in this segment will compromise quality for the neighborhoods they love. Location, location, location is key here.

PRICING:  Pricing needs to be aggressively at or below market rent for comparable units. If comps are indicating $1650 for similar units in the area, reduce slightly to sway them to your property. A nominal reduction is a small price to pay for a higher quality renter, particularly in this segment.

TIP:  Thorough tenant screening processes will minimize risk which should be your priority when operating with this demographic. Pet concessions (with landlord verifications and additional deposits to protect from possible damage) will help to stay competitive for this segment.

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WHY IT MATTERS & FINAL THOUGHTS

From tenant protection laws to city-imposed ordinances, stakes are rising for Oakland landlords.  One of the biggest mistakes we see today are owners placing blind ads on Craigslist and filling units as soon as possible.  While vacancies can be costly and take away from your monthly draw, if handled improperly, the consequences can be astronomical. 

Whether you plan to hold, sell or refinance now or in the future, adopting a more proactive, strategic approach – from preparing your unit, to targeting specific tenant demographics and taking the necessary steps for screening – helps owners secure stronger tenancies; strengthen the positioning of their investment; and protect their financial security.