With all the talk of millennials moving to cities, many believe the traditional American dream of residing in a single-family home is dead. While it’s true that young people seem less interested in owning homes than their parents, that doesn’t mean they lack an interest in living in single-family homes. In fact, single-family home rentals present a combination of flexibility and stability that holds significant appeal for millennials and older individuals.
By purchasing single-family rental properties in the correct areas, investors can capitalize on this trend and greatly improve the yield from their investments. There has never been a better time to enter the world of single-family rental investing, and current trends indicate it will remain a strong market going forward.
Apartments lose their allure
It might surprise people outside the rental housing industry, but single-family homes actually house a larger percentage of the renting population than buildings with more than five units, according to the National Multifamily Housing Council. Nearly 45 percent of renters live in single-family homes, and there are indications that more millennials will move into these types of structures soon.
The National Association of Home Builders recently polled people who were born after 1977 and discovered millennials’ desire to live in cities has been significantly overstated. The study found 66 percent of millennials wanted to live in the suburbs, and three-quarters desired a single-family home. Unfortunately for this generation, financial reality might get in the way of their homeownership desires.
The Bureau of Labor Statistics noted many millennials have been forced to postpone life decisions as a result of financial instability caused by the Great Recession. These financial truths are also partially responsible for an attitude shift away from buying. According to the BLS, the unemployment rate for people under the age of 25 was over 14 percent in the early parts of last year. While that number may have decreased as the economy started to recover at the end of last year, these young people lack the savings and financial confidence to purchase a home.
That same uncertainty makes the inflexibility of homeownership unappealing. Young people who have not had a steady job during their lives may not want to be tied to a specific location. Renting provides freedom that young people value, and single-family home rentals allow young people to enjoy that flexibility in the type of structure they desire.
Picking the right place
These trends illustrate the potential value in single-family rental properties, but it can be difficult to pick the correct location for SFR investment. In these cases, it’s best to select areas that have strong job growth in industries that appeal to younger workers. Diverse and growing economies will attract young people, and these individuals will need a place to live. Some may purchase homes, but that’s simply not an option for a huge portion of this demographic group.
If you are an investor who wants to benefit from the move toward single-family home rentals, HomeUnion® makes the process easy. Register on HomeUnion®’s site to see hundreds of prevetted homes in the nation’s top markets for SFR investment. Each of these properties has been selected using a combination of deep-data analytics and in-person research, so investors can select distant properties with confidence.
Once an investor chooses a location, HomeUnion® can provide financing through an in-house lender and handle the property and tenant management that can be cumbersome for a new investor. The housing market is changing, and investors can build a diversified portfolio with consistent yields using SFR real estate. HomeUnion® simplifies the process and makes real estate investing nearly as simple as purchasing a stock or bond.