- Understand the movement of the rental market from the perspective of your renters.
- Adjust your portfolio accordingly to meet the shift in demand.
- Evaluate your processes (or reach out for help).
According to Marketing Charts, 21.7% of the US population consists of millennials, the age group of those born between 1981 to 1996. Now, here’s a curveball: The median age for homeownership is 45. When you compare this with the average age of a home buyer in 1981 (31 years ago), a dramatic market pattern emerges.
The majority of millennials have often been miscategorized as “rental lovers.” This common narrative results from how this age group easily dominates the demand in rental markets. About 12-20% of renters in metropolitan areas have even considered ‘renting forever’ because of how costly homeownership is.
Statistics like these tend to leave investors with the impression that millennials aren’t so keen on owning a home. However, this age group may have a deep-seated desire for stability as they age. In fact, a Bankrate survey indicates that 65% of participating millennials still regard home ownership as an indicator of success. A combination of student loan debt, lack of funds for a down payment, and shrinking affordability keeps renters renting.
The demand for single-family rentals continues to increase as renting remains the most practical option for many age groups, including millennials. Renters who say they’ll likely rent forever are shifting their focus away from the costs of potential millennial homeownership. At the same time, they are redirecting their interest toward a rental experience that feels more like home.
What fuels the demand for single-family rentals?
While you may have noticed an uptick in demand for single-family rentals due to the pandemic, changing tastes for half of the nation’s population is not a sought-after trend. The future of single-family rentals has roots as deep as the Great Recession of the early 2000s.
The impact of that recession shaped the modern rental market you see today. It created a barrier to millennial homeownership that began with their parents and wave after wave of foreclosures. Purchasing a home got more and more challenging, and by 2017, more Americans renting their homes than in 1965 and after.
The scope of the recession and its historical impact on the American housing market made millennials reconsider the decision to start a family or have a place to call their own.
However, the delay in starting families specifically was exactly that; a delay. This generation has reached the point of leaping to have children—while facing the dilemma of a lack of affordable housing they can own.
The pressures of cramped apartment living that drove millennials from the cities to rent in the suburbs during the height of the pandemic won’t be slowing down any time soon. Covid-19 has accelerated a shift in lifestyle that was already on the rise. The trend of working from home quickly became an aspect of everyday life in 2020. And with it, interest in amenities shifted from now-closed gyms and pools to increased square footage for a home office or two.
Even with the dramatic drop in interest rates in 2020, a sharp spike in lending restrictions only reinforced a concept that was not news for many renters. Without a hefty down payment and high credit scores, owning a home would remain out of reach. To meet expanding needs for comfort, security, and growth potential, the demand for single-family rentals will continue to grow as long as it outpaces available construction.
Future moves for owners and investors
Taking advantage of this surge in demand for single-family rentals requires strategic planning. Renters who know they can’t afford to own while paying for the rental experience will expect the best of both worlds from the homes in your portfolio. It can also be beneficial to appeal to a wider pool of applicants and market your units to Gen Z renters.
Fortunately, you can amplify the attractiveness of any rental with a few changes that won’t break your budget. The key is to know what your audience is looking for in a home first, especially for those who transition away from apartment living.
Desirable amenities include:
- USB-charging outlets or integrated smart home technology
- Easy-contact options for tenant-owner communication when they need to reach you
- Straightforward, online rental payment options
- Rapid responses to maintenance requests
- Functional outdoor spaces
Remember, your prospective applicants will be coming from a housing system with limited leg room. The majority of them might have traded off the extra space for concierge-like services of apartment living. Hence, providing similar services coupled with a bigger living space will help draw in qualified renters.
However, steering your portfolio in the most profitable direction requires extra work on your part. You’ll need to collect rent, stay on top of maintenance tickets, coordinate with vendors, and more. Consider working with a tech-enabled property manager to enjoy the benefits of hands-off ownership while still providing the gold standard of customer service.
Your property listing will be crucial
Even if you have an ideal property, you need to be able to market your home effectively! Highlight the reasons why your single-family rentals are the right choice for those considering a move away from multi-family living. The easiest way to do this is to point out how your property will fit into their single-family lifestyle.
- Highlight your property as an ideal work-from-home space with the perfect light for a green thumb.
- If you have a fenced-in yard, highlight that in your listing as an added benefit for safety, security, and pets.
- Does your property come equipped with a smart doorbell or thermostat? Mention it!
While these may seem like small perks, safety and comfort are high on the list for millennial renters looking to start or grow a family. You can appeal to what your potential audience is looking for in a home without explicitly defining your property as ideal for a single “type” of renter.
Take a minute to evaluate the structure of your listing process as well:
- Are you using high-quality photos or 3D walkthroughs to showcase your property accurately?
- Do you list crucial details about the property that your renters need to know upfront?
- Is it easy for prospective applicants to reach you or tour your property?
If you answered “no” to any of the above, an overhaul of your processes will help cut vacancies and shore up the value of your properties.
Before you even start crafting your listing process with the above market details in mind, reach out to Poplar for an expert rental property estimate. Understanding your rental rate is the first step toward making the most of your single-family investment.