Who are the Best Renters in Today’s Economy (2020)? – HomeUnion

Who are the Best Renters in Today’s Economy (2020)?

Renter Economy 2020

This is a major structural shift in the rental population that prompt the following questions:

  1. Who are today’s renters?
  2. What are the best renters in today’s economy?
  3. What type of renter should I look for?

Here’s a summary on high-wage earner’s (earning at least $100,000 a year) rentals:

  • Record occupancy, rent growth and retention (Source: Invitation Homes, AH4R)
  • An influx of CA tech workers and NY finance firms into Denver, for example, has made the area soar in housing prices making buying difficult and positioning towards rentals [You would need $94,000 in 20% down payment for a median purchase price of $471,000 in Denver]
  • In Y2019, ~19% (+7% increase from Y2006) of US households with six-figure incomes rent their homes; the increase translates to 3.4 million new renters of this category
  • As renting increases, proportionately the wealth gap is likely to widen.  Owner houses have been the democratic assets for the middle class and an increase in price appreciation improved the wealth of the owner.  The recession caused big declines in their household wealth.
  • Since the post-recession, the number of renters has surpassed the number of home buyers returning to the market
  • To accommodate well-off renters, developers have raced to construct luxury apartments around city centers
  • The average tenant of Invitation Homes Inc. and American Homes 4 Rent, now earns $100,000 a year, the companies say
  • Six-figure renters are the fastest-growing segment of renters in Houston, Denver, Nashville, Seattle, Cincinnati, and Ann Arbor and their count doubled or more between Y2006-2017
  • Big home-rental companies (our sweet spot) are betting higher earners will continue renting

Key Takeaways:

  1. Strategically, aim at identifying and targeting these 6-figure renters as the headache of eviction, chasing for repeat leases, inconsistent rent payments or a long time to rent, or vacancy arising due to rent increases, etc. all diminish with this segment.
  2. This segment will bring in Property Management process efficiency paving the way for scalability investors look for.

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