The Top 10 Trends in Real Estate Investing
There are many different things to watch out for in your real estate investing business. Following what is going on in the world of household formation and where people want to live is paramount to know when you are in the world of being a landlord. As I focus on real estate from a global perspective, I am always uncovering the latest trends and I must say things are shaping up quite nicely for the real estate investor. If you too want to know what is happening that will benefit your investing business then you will want to read on.
The Top 10 Trends in Real Estate Investing:
Rising rents, however at a slower pace:
With fewer people opting for home ownership than in the past 10 years and coupled with growing household formations, landlords definitely win on the supply and demand front. Rents continue to rise, but not as sharply as they have in the past couple of years. Of course this is good as it is important to create stable rents that can be paid by the tenants.
More retirees and empty nesters opt for renting:
These aging demographics are finding comfort in the rental arena. They have a large desire to rid themselves of the burden associated with home ownership. Now that their Millennial children have moved out of the house, they want to move on to the next phase of their life and this includes downsizing and living a carefree lifestyle.
Easier down payment requirements:
Over the past 3 to 5 years, many people who wanted to buy a house did not even try as they did not feel they could qualify for a home loan. Fortunately down payment requirements have reduced, however the restrictions still remain high. With so many hurdles to overcome, many people are simply not interested in the challenges of attempting home ownership. Rather than try to secure a home loan they continue renting.
Smaller cities are an increased draw:
This has surprised many, but both baby boomers and the Millennials are finding the small cities are cheaper to live in and as long as the city offers the activities they like such as theater or sports and dining options. The smaller cities with less traffic and population are becoming favored by both of these age groups.
Home ownership shrinks while renting demand grows:
Fueled out of necessity after the economic collapse, many lost their homes to foreclosure and short sales. The rapid buildup of home ownership rates have now dropped back to historic normalcy. With the freedom that rentals have offered and the less obligatory financial tie downs, along with freedom to move quickly, many have actually found comfort in simply renting.
The highly sought after Millennial:
Those of us who have children who are Millennial’s may already understand some of this, but Millennials are the largest pool of renters in the country today. These young professionals are seeing the largest opportunities for job expansion as well as the group receiving the highest pay increases. They want to be flexible and less tied down so renting is a choice for the majority of them. The real estate sales industries as well as mortgage industry are all campaigning trying to get a piece of the Millennial’s housing budget.
read more about Millennials in the real estate investing space
More apartments are being built:
Wherever there is a need there are individuals or groups trying to fulfill that need. Builders have seen the huge demand for rentals and are building more apartment units to fulfill this need. The larger share of renters, however, are opting for single family home rentals as everyone cherishes their independence.
Marriages are being postponed:
When you read these headlines do you instantly think of rental opportunities? I bet you do now. As people are postponing marriage until their mid to late 30’s, if at all, the need for buying a house and taking on the burden of home ownership is not as attractive. Fewer marriages mean smaller families which translates into small housing needs. Again this group prefers to rent.
Higher mortgage rates:
Federal government programs (quantitative easing) designed to keep mortgage rates low has come to an end. As the year progresses forward, interest rates will continue to climb. This will not be a rapid increase, however even a half of a percentage point can make a significant impact on a monthly mortgage payment. These increased rates will put additional interest on people to rent as affordability will continue to be an ongoing obstacle.
How To Win The Millennial Tenant:
This is a group of young adults who want to live in the inner city, as being close to work and entertainment is important to them. As they have postponed marriages the majority of them have pets for companionship. So to win the Millennial over you want rental units near activities and work and that are pet friendly. Lots of amenities as this group grew up with gadgets and electronics so promoting these amenities is important to win them over.
There is a very common theme here. Rental demand is strong and covering a broad demographic of people and many reasons for the high rental demand. Pair that high demand for rental homes with low acquisition prices of real estate and you have a perfect storm of events for any real estate investor to capitalize on opportunities that they may never again see in their lifetime.
I know that you often hear that there is no time like now to buy real estate investment property, but this is really the time. I am seeing more and more articles touting the benefits of adding real estate properties to your investment portfolio and with the turnkey real estate properties that we have listed, you can have all the benefits of investing without the hassles of fixing toilets and chasing down rents.