Over the years, rental properties have been traditionally perfect for 2 types of people.
You have the twenty-somethings who are just getting started in the business world and aren’t ready to plant their roots just yet and then you have the people who are for some reason or another at a “temporary” time in their life.
Real estate investors who have rentals in their portfolio know this. They consider this when choosing the location and size of the property and it has worked out well in the past.
Nowadays, in addition to renting out to Millennials, there’s also a rising number of Baby Boomers who are choosing to rent instead of own.
Millennials that are well into their thirties are choosing to rent longer instead of saving up to purchase a home. In addition, more and more Baby Boomers are choosing to sell their current home and move into a rental property.
This is opening up a huge demand for varying levels of rentals all over the US.
From small studio apartments to large 3 or 4-bedroom houses, people of all stages of life are choosing to rent now, more than ever.
Depending on who you ask, Millennials are people born roughly between 1980-2000.
For those that are out in the working world, they’re right smack in the middle of high market prices and high demand. Being at the top of the cycle when they’re “supposed to be buying” is scary.
Many watched their parents home go down in value after the 2008 market crash and watched helplessly as hard-working people lost their jobs and their properties.
This leaves them renting longer.
In addition, millennials are getting married and starting families later in life. Their single life is being extended and they’re able to enjoy life without having solid footing on the ground.
Baby Boomers, on the other hand, were born roughly between 1946-1964. They were taught that you should purchase a home for your family and to watch the equity grow as the years go on.
When the 2008 market crash hit and so many had negative equity, it was a real eye opener for them and they’ve realized that you don’t have to follow what they were taught.
Taking a lesson from the Millennials, many have decided they don’t want their money tied up and instead want to be able to travel and enjoy the low maintenance life of living in a rented property.
While Millennials are typically looking for smaller properties that are more affordable, Baby Boomers are quite the opposite. They don’t mind spending a bit more for luxury and want room for family visiting.
So what does this mean for real estate investors?
Your demand will be high, allowing for gradual increases in rent.
Potentially, your vacancy rate will be lower. This is due to reliable tenants (especially the Baby Boomers who don’t want to move often) and the continuous demand.
When looking for a property to use as a rental, make sure to keep your tenant in mind and consider what they’re looking for. Properties near downtown or corporate areas can be good for Millennials while nice neighborhoods in the suburbs fit the Baby Boomers nicely.
Take advantage of the current market.
Watch for shifts in the market.
Adapt as needed to stay ahead of the game.