Rental Property Investment Trends in 2019

[Kyle Mccaw]

As an investor, you know that real estate offers the opportunity to create investment income, build equity, and diversify your portfolio. But, the market is never stagnant. Keeping up with the latest rental property investment trends will help you make the best decisions about how to invest.

Millennials are Renting More Often

The American dream of home ownership is still strong among many demographics. However, the Millennial generation hasn’t bought in to that dream as much as prior generations. Research conducted by Pew Research shows some interesting differences. For example, in 2016, only 37 percent of Millennials lived in a home that they owned. Baby Boomers at the same ages chose to live in homes they owned 56 percent of the time.

Saving money for a down payment is more difficult for Millennials. The job market is tight and many aren’t making enough money to pay off student loans and save money at the same time. As a result, more Millennials are choosing to rent rather than buy. Investors would be wise to cater to this generation.

Late Baby Boomers are Renting More Often

While many experts believe that Millennials are the key renter demographic, other factors are pushing Baby Boomers into the rental market. Investors should be prepared to target the Baby Boomer generation as the next wave of people choosing a rental lifestyle.

Often, Baby Boomers have less money for their retirement than they anticipated. The recession in 2008 reduced the savings of many, and stagnant wages in recent years means that many seniors will be heading into retirement with less financial backing.

Many of them are planning to rent to increase their access to liquid assets that they’ll use for things other than housing. Recent research indicates that 59 percent of seniors think that renting makes more financial sense for people in their situation.

Single Family Homes Remain a Popular Alternative Investment

As an investor, you probably hold a combination of stocks, bonds, and cash in your portfolio. Real estate represents an alternative investment that helps you diversify your holdings. Real estate is interesting because it doesn’t correlate to returns on traditional investments, it quickly generates cash flow, and it represents longer-term potential for building equity.

High net worth investors continue to use real estate as an important alternative investment. Almost half of the respondents in recent studies indicate that they have a minimum of 25 percent of their assets in real estate. In addition, the preferred type of investment is single-family rental homes, purchased by 73 percent of the high net worth investors who invest in real estate.

All indicators are that the real estate rental market is going to remain strong. If you plan to take advantage of the opportunities in the market, it’s not feasible for you to manage the property yourself given all the demands on your time. In fact, going it alone is one of the biggest mistakes an investor can make.