The US rental real estate market continues to thrive, thanks to slowdowns in mortgage applications and a rapidly growing pool of nearly permanent renters – people who either can’t afford to buy a home or who are choosing not to. Three very different tenant groups that are changing the face of rental housing are looking for similar things – and creating new opportunities for investors.
Recent studies show that over half of US children are growing up in households headed by a single mother. Those findings aren’t new, but their impact on the demand for rental housing is a recent observation. Single mom households can take many different forms: young, unmarried, struggling to get by; midlife, suburban, smacked by a sudden divorce; single, affluent, choosing to have a child without a partner.
Some single mothers are raising children on their own because of domestic violence. They may be struggling to balance work, school and childcare. Some have stable jobs; many don’t. But as a group, these single parents aren’t generally able to buy a home. Credit issues, a shortage of money for down payments and unstable employment make it hard for these women to make the switch from renter to homeowner.
Another group of semi permanent renters is the so-called millennials – young professionals and ercent college graduates. They’re currently the largest demographic group in the country, ad they tend to forgo – or at least postpone – buying a home. They’re often carrying large amounts f student debt and struggling with employment issues. Most are choosing to postpone marriage and children, two key factors for buying a house.
Predictions for future real estate trends suggest that millennials’ demand for rental housing will stay high –and that these young renters have clear preferences for the kind of housing they’re looking for: safe, close to work and social amenities, and pet-friendly. Though some say that home buying is in their future, financial troubles and lifestyle choices make renting a long-term option for many in this group.
At the other end of the age spectrum are retirees and seniors, ranging from younger “empty nesters” to older individuals who want to downsize and perhaps travel. For them, renting is a smarter option than maintaining a larger family home. Although some in this group are looking for a retirement community lifestyle, many want smaller, more manageable housing that’s safe, close to amenities like shopping and healthcare. Access to public transpiration may be a plus – and so is accommodation for pets, not children.
The preferences expressed by these three apparently very different groups of tenants re really very similar in several key ways. Easy access to public transportation is a strong plus for millennials, who may not even own cars, and single mothers who may not be able to afford one either. For those on the other end of the spectrum, public transport is a way to stay mobile and independent.
Safety is important to everyone, but for renters with children and seniors it’s a major factor in choosing where to live. And safety can mean many things, from well-lit walkways to deadbolts on doors. The landlord/investor hoping to attract tenants from one or all of these groups may want to invest a little time and effort toward finding out what those renters consider the most valuable.
Pets and children can be hard on a home –and these renters come with one or the other – or perhaps both. While it’s not legal to deny housing to someone with children, it’s perfectly legal to impalement a no pets policy, or to charge hefty deposits toward pet damage. But new studies on rental housing have shown that pets actually cause less damage than children – and a pet friendly policy goes a long way toward finding and keeping good renters, especially from the millennial and senior groups.
Rental trends come and go. But the factors that led to the current boom in rental housing are still in play: credit problems, employment insecurity and a lack of ready cash. Those and other issues plaguing many hopeful homeowners make it hard to qualify for mortgages. Combined with the number of people actively choosing to rent, rather than buy homes, these individuals make up a large and ever expanding pool of long term tenants who may never buy a house.
And that means a steady flow of renters who are in it for the long haul – and new opportunities for building long term wealth for investors taking Jason Hartman’s advice to stay educated and in control. (Featured image:Flickr/wonderworks)
Gidman, Jenn. “More Than 50% of US Kids Will Live With a Single Mom.” Newser. newser.com. 17 Dec 2014.
Read more from Solomon Success:
The Solomon Success Team