The profile of today’s renter is changing. With all of the drama in the financial and real estate market over the past few years – upside down homeowners needing to sell, foreclosures at astounding rates, bankruptcy filings increasing, and strategic defaults – the premise that everyone wants to own a home is no longer valid. Homeownership is down to a 10 year low of 62% per a Gallop Poll in April 2012. This leads to the realization that 38% of people need rental units.
So who is today’s renter? Look at your neighbors. That is right. We are seeing the people who traditionally have owned, now opting to rent. In the past 2 years, the renter demographic has significantly changed. Professionals who have good jobs, but either due to, the choice they made to release a home back to a bank, being in over their heads with debt, a forced relocation that caused a hardship, or in some cases – just don’t like being a homeowner. These professional still want the same type of home that they were living in before. They want the same amenities and conveniences; they just want someone else to pay the mortgage.
So what does that mean for investors? If you are looking to purchase real estate for long term holds, we recommend that you purchase newer homes in the best school district you can afford. The newer homes appeal to today’s renter versus the older homes that used to be an investor’s bread and butter inventory. Four or more bedrooms is also a plus as families are getting larger and home office space allows for more flexibility.
Banks are getting smarter about getting the best possible price for their inventory. We are seeing banks offer homes with very low list prices in an effort to bid up the prices with multiple offers. This creates an auction style approach to real estate and should be approached with care. As real estate investors, we make our money on the purchase of the home – so if we over pay for the property, we will feel the effect of that for many years to come. However, in some investors quest to “get a deal”, they will get caught up in the frenzy and not take into account the total cost of ownership for the property.
Interested in finding out how you can make money in real estate investing? Contact Mark Lackey at 404-886-8789 for a free 30 minute phone consultation.