When purchasing an investment property for the purpose of converting it to a rental unit, you have to understand the mindset of a renter in order to effectively understand who you will be entrusting your investment to during the period of the lease.

Renters are Not Buyers
The most important concept to remember is that renters are not buyers.  While there are overlaps between what renters and what buyers are looking for when shopping for a property, you will find that if you assume that buyers and renters share a similar mindset about what is important to them when house hunting, you will have a hard time renting your property.

Here are some key differences between renters and buyers:

• Buyers will lower there expectations based on price; Renters will not.
  When shopping for a home, as the Buyer looks at homes they will learn that their $200,000 loan will not allow them to buy a $300,000 home.  That is because the monthly price difference is significant.  A Renter, on the other hand, is not limited by a maximum loan amount and is often willing to spend a little more per month for a better home in the same area.
• Buyers are willing to consider upgrading a property that they purchase; Renters will not.
  A Buyer is often willing to buy a smaller or more distressed home in a better area that they can upgrade over time.  A renter, on the other hand, has no intention of investing any money in the property beyond their monthly rent.  As such, a Renter will usually not settle for a home that is in bad condition or too small for their needs.
• Buyers are more concerned about the long term investment of their property: Renters are not.
  When a Buyer purchases a house, they are concerned not only about meeting some short term goals but also how the house will work for them in the future.  As such, Buyers tend to make decisions based on their perception of the future.  Renters rarely have any long term considerations when thinking about a home to rent.  
• Buyers often have a significant period of time to purchase; Renters do not.
  When a Buyer starts house hunting, usually they allocate a significant amount of time because they understand that a lot has to be accomplished before they can move into their home (getting a loan, inspections, settlement, etc.).  Renters, on the other hand, usually start looking for homes no more than 60 days in advance of when they intend to move. 

Renters Don’t Care about Your House
A common misconception is that a renter will take great care of a house of they absolutely love it.  This mindset is especially prevalent in landlords who are converting their primary residence into a rental unit.

Renter’s don’t care about your house.  Renters do like having a nice house to live in, and they will decorate it and keep it clean if it is a good unit to begin with.  But the attention to details like the small watermark that is appearing on the ceiling in the closet, or the odd ticking sound coming from the air conditioning unit, will not generate the immediate “fix” response that would be more common in the property owner.  Why?  Because the tenant typically does not become attached to the house itself the way an owner will.  Tenants simply lack the “pride of ownership” that someone who is paying a mortgage has. 

That is not to say that all renters will take poor care of your house.  It is simply stating that a renter is significantly less motivated to care for your investment than you are.

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