Millennials might get a bad rap every now and again, but there are more than 76 million of them in the U.S. alone, and they are the largest generation born in the 20th century.
That’s a LOT of people with huge spending power!
Millennials grew up in an electronics-filled and increasingly online and socially-networked world. They are the generation that has received the most marketing attention. Having been raised under the mantra “follow your dreams” and being told they were special, they tend to be confident. While largely a positive trait, the Millennial generation’s confidence has been argued to spill over into the realms of entitlement and narcissism.
Yes, they post selfies on Facebook, Instagram and Snapchat and send about 50 texts a day, but they are the first generation that is expected to be less economically successful than their parents.
So, what does that mean to you as a real estate investor?
Millennials will be renting for a much longer time than previous generations due to job mobility, high mortgage rates, and low liquidity. They have an unemployment rate of more than 8% and $1 trillion in student loan debt, which means they’re increasingly renting instead of buying homes. This is relevant to you, the modern day real estate investor for the fact that the numbers are in your favor, and will continue to be in your favor for years to come.
That being said, Millennials are recognizing the many benefits of renting — including reasons that have nothing to do with money. What makes a rental unit appealing to a Millennial tenant? We break it down for you:
Love of Community
Millennials are drawn to the community and shared spaces. With limited budgets in urban locales, younger renters are enjoying common kitchens or coffee bars, libraries, and rec rooms.
Plus, there’s the love of community outside of the building or neighborhood itself. Renting a downtown apartment allows a Millennial to live in close proximity to enjoy culture and nightlife without having to move to the suburbs — even if they could afford a house in a more residential neighborhood. But if Millennials DO want to try living in a suburban neighborhood to get to know that community before making a commitment to buy, renting is always an option.
Love of Flexibility
Many Millennials see the ultimate benefit of renting arise from the flexibility of leaving for any reason, especially career reasons. Millennials tend to change jobs three times more often than their older counterparts, and stay with the same employer for just three years on average.
Renting instead of buying makes transferring to a new or better job much simpler. Some leases may even include a termination clause that specifies acceptable reasons for early termination, such as a job transfer that is more than 50 miles away. If this is the case for you, make sure that it is clearly stated in the lease agreement that you have with your renters. In some cases, the tenant may not be liable for any payment if the unit is re-rented within a particular time period. Talk about all of the options with your potential renters and come up with a solution that works for everyone.
Love of Convenience
There’s a lot of work that goes into maintaining your own home—yard work, standard maintenance and repairs, and important upgrades. Plus, if something major like a furnace breaks, it’s on you. Renters are able to keep home maintenance out of their budgets, and out of their weekend to-do lists. For Millennials with active lifestyles, having fewer things to do around the house can have a huge upside.
So, with homeownership of Americans ages 25 to 34 declining nearly 8 percent since 2006, it means that young people are more willing to send a rent check vs. a mortgage payment. Renting is its own lifestyle and is currently dominated by Millennial city dwellers across the country. Therefore, embrace their sense of wanderlust, flexibility and convenience, and see how you can turn their traits and characteristics into profits
Rent Marketplace helps independent landlords, realtors, and property managers screen tenants, select the best ones, and stay compliant. With online applications, tenant screening, state-specific leases and more, users can move in reliable renters, faster.