BUILDING NEW CONSTRUCTION HOUSES FOR THE RENTER, YES, IT IS A THING!

This entry was authored 3 weeks ago, before the market change. Interesting foresight, so we left it as written
As times change, so do living habits. After the financial bubble, the housing landscape has changed out of necessity. This change is already affecting how many people prefer to live. More and more people are choosing to rent as opposed to buying a home.

Most surveys show that the number one choice for home renting is the single-family home. Many People who were forced out of their homes or chose to down size during the bubble wanted to desperately get back into a house right away. After all no one likes going from a house to an apartment. Their biggest desire was to find a rental House so the kids and dogs still have a place to play. This has created a huge demand for single family home rentals.  People of all ages enjoy the solitude a single-family home offers. Landlords prefer single family homes as they tend to draw tenants that take more pride in their homes.

Your Apartment or Your Home

I know from personal experience with the many properties I have owned that people who rent often do not call their home a "home". I have found that when people live in multifamily housing, they call that property their "apartment", while people who live in a single-family home will indeed call it their "home".

I believe there is a psychological attraction to a building when they have total reign over the entire property. It is not a shared dwelling it is their dwelling, their home.  This leads to more pride in their homes and therefore they tend to take better care of it.

WHY PEOPLE RENT

Baby boomers

Now that their adult children have finally flown the coup and gotten their own places, these aging parents want to rid themselves of the daily maintenance concerns and want to travel and be footloose and fancy free. They do not need their big homes anymore and choose to rent and be more transient. Often baby boomers move to the south where it is warm, or they move to be closer to their grandchildren. The common denominator is they want to live in a house.

Millennials

This group of people is the largest segment of the population and they too want to be transient. Millennials have the fastest growing incomes and they want to be flexible to go to where the jobs are. There is also a large group of these people that are carrying large student loans and cannot qualify for or believe they cannot qualify for a home loan if they wanted to. Together this group represents a lot of renters.

The people forced from their homes

Foreclosures and bankruptcies that occurred over the past decade forced many people from their homes and into rental living. Many of these people they have found comfort in not being strapped to a mortgage with a high balance. They have found comfort in renting.

Investors

Yes, Investors too like to rent the home they live in, I know this surprises a lot of people. Why would investors want to rent a house? The ability to be transient today is the name of the game. Many people know that real estate makes for a great investment. So, the investor on the go finds it makes great sense to rent a home that he lives in so he can pick up and relocate without being tied down. They can also enjoy all the financial prosperity of investing in Real Estate.

Lack of available rental houses

With so many people wanting to rent and with such limited property available for them to do so, builders have taken notice and are actually building homes with renters in mind. Yes, we now live in an era where builders are designing and building these houses with renters as the focused occupant.

Investors can create long term investments from new construction

The new construction investor of course focuses on long-term buy and hold strategy. With new construction comes warranties and newer building codes which will provide for long term sustainability to the structure.

The key to watch for is to only buy new construction in highly owner-occupied areas. Most reputable builders will only allow 10% of the properties to be sold as rental property. This is to help ensure the values in the areas continue to climb as the attraction for a home buyer is to buy in predominately owner-occupied areas as this is best for accelerating resale values.

Location is still top priority

When you find new construction properties in an area of great growth with job growth, population growth and an area that is considered undervalued you have a great investment.

Happy investing

The author’s opinion cannot be construed as tax or legal advice, and may not represent the views of HTBUSA or its stakeholders. HTBUSA is not a legal service or professional tax service. As with any investment, there is an inherent risk in investing in real estate.