Today’s REI Classroom Lesson
Different neighborhoods appeal to different demographics, as Kevin Ortner shares. Knowing who your demographic is for a rental property can help you determine what renovations need to be done and how to market the property effectively.
REI Classroom Summary
If a property is by good schools and parks, the demographic could very well be different from a property closer to the city. Take into consideration who would want to live there. In addition, more millennials and Gen X’ers are renting instead of buying these days.
Listen to this REI Classroom Lesson
Real Estate Investing Classroom Show Transcripts:
Mike: Welcome back to the FlipNerd.com REI Classroom, where experts from across the real estate investing industry teach you quick lessons to take your business to the next level. And now, let’s meet today’s expert host.
Kevin: Hi. I’m Kevin Ortner, CEO of Renters Warehouse, and I’ll be your host today for REI Classroom. We’re going to talk a bit about getting to know your renters.
Mike: This show was sponsored by passiverental.com.
Kevin: The world’s changing and that means the real estate market’s changing, and so are the people who rent. I like to say we’re living in a renter nation. More people are renting today than ever before and from across all demographics and generations.
Interesting note is even in this great real estate market, or good real estate market, depending on where you live, home ownership rates continue to decline. In fact, a U.S. Census Bureau recent report from a couple of months ago showed home ownership rates had a 50-year low. Yet properties are flying off the shelves.
What does this mean? It means that these properties are being bought by investors to rent. And we have an ever growing renter pool of very changing dynamics and demographics.
Let’s start with the Millennials and Gen X’ers. These are the folks just coming out of high school, or maybe just coming out of college and starting their careers, and they have a different view of real estate than many of their parents and grandparents did. The old American dream was to graduate from college, get married, get a job, have 2.6 kids and a car in the driveway and own a house. Today, owning a house doesn’t mean the same to this new generation coming up.
Part of it is psychological. They watched their parents go through a real estate downturn and many of them have their equity and family wealth evaporate overnight. But it’s also a lifestyle choice. Millennials and the Gen X generation want to be more mobile. They want to be more flexible. We’re living in a migratory economy in the day of Uber, Airbnb and apps. And we might want to live in Minneapolis today and move to Seattle in 6 months or 12 months for a job, and relocate yet again, and just don’t want to be tied down. Want to have that freedom and the ability to save money, so that they put themselves in a better financial position when they do buy a home. So the attitudes are very different. A lot of focus on renters today are around this group of Millennials and Gen X’ers.
However, it’s interesting that Baby Boomers are actually seeing the highest renter growth rate of all demographics. So we are seeing more and more people in retirement choose to rent rather than own. A lot of them are selling their home, taking that equity and using it for other activities in retirement or financing their retirement in a different way. Not having to worry about maintenance and upkeep of a property, and choosing to rent instead. Great renter demographics and a great renter pool with very secure income, very responsible lifestyles and living choices. So, fantastic people to rent properties to.
The key is for, as an investor, is to know your target demographic, who’s going to rent that property. And also understand that today and maybe for the next decade, it’s going to be a fantastic time to continue to own these rental properties.
The larger renter pool is going to continue to push prices up. And it’s up to you, as a real estate investor, to understand your focus. If you’re going to be renting to the Millennials and Gen X’ers or target those groups, you want to have properties that are close to amenities where they can walk, walking distance. You want to have technologically advanced homes. Many homes today have Bluetooth capabilities where you can open and close garage doors, turn on and off lights, adjust a thermostat. These things are attractive to that type of demographic.
And you’re obviously going to have maybe a bit of a different focus in your home if you’re really gearing your rental properties toward that Baby Boomer or growing family type of renter as well. So the key is to know your demographic of who in your area, in your communities, are renting properties, how you’re going to be able to market to them and how you’re going to be able to make your property more valuable to them. But also understand that we’re in a changing demographics across the country and our renter pool continues to grow, which is going to be good for real estate investment for the long term.
That’s it for today on REI Classroom. We’ll see you next time.
Mike: Passiverental.com is your source for turnkey, done-for-you rental properties. If you’d like to be an investor, and not a landlord, please visit passiverental.com to learn how to purchase cash-flowing, professionally managed rental properties in the hottest rental markets across the country. We can also help connect you with financing for your next property. Invest the easy way today and get started by visiting passiverental.com.
Please note the views and opinions expressed by the individuals in this program do not necessarily reflect those of FlipNerd.com or any its partners, advertisers or affiliates. Please consult professionals before making any investment or tax decisions, as real estate investing can be risky.
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