Want to cash in on the rental economy? You have to know where to look. Keep reading to learn more! According to the Census Bureau’s 2007-2017 American Community Survey, the cities that have seen the most significant increase in the number of wealthy renter-occupied households are Seattle and Charlotte. Keep reading to learn more about opportunity zones.
Want to cash in on the rental economy? You have to know where to look. With home prices outpacing wages, renting is now more affordable than buying a home in 59 percent of U.S. housing markets, according to ATTOM Data Solutions’ 2019 Rental Affordability Report. Major markets where renting is cheaper than buying include Miami, New York City, Seattle, Las Vegas, San Jose, Houston, San Francisco, and Boston.
But there’s a twist: Even for those who can afford to buy, many are choosing to rent instead. In fact, of the 43.3 million renters nationwide, 2.1 million are top earners. That means you’re free to extend your investment property search beyond the confines of cheap rentals.
According to the Census Bureau’s 2007-2017 American Community Survey, the cities that have seen the most significant increase in the number of wealthy renter-occupied households are Seattle and Charlotte. Seattle’s growth has been attributed to a high-salary job market in IT and quality management, while Charlotte’s rise is linked to strong STEM job growth.
Whether people are renting by default or by choice, the rental economy remains strong. The key is to determine which renters you’re seeking, where to find them, and how you can secure the funding you need to seize every opportunity to scale your business.
Varying Demographics of the Rental Market
While millennials often choose rental properties for the flexibility and freedom they provide, boomers tend to rent after downsizing from a larger family home to a smaller property that requires less maintenance and care. And while millennials enjoy renting in and around cities for increased job opportunities and cultural experiences, boomers choose to move to metropolitan areas for greater access to transportation and senior services.
Of course, urban properties are not the only rentals to consider. Mature suburbs, emerging suburbs, and exurbs have all experienced five consecutive years of increased growth rates. And, all of these locations contain a high ratio of single-family rental (SFR) units.
Though renters’ location preferences and reasons for renting differ, savvy investors can build single-family rentals and multifamily rentals that cater to all needs and demographics. In such a strong rental economy, you’re free to pursue renters of all ages and stages of life.
Growth Areas in the SFR Market
Obviously, a key consideration in your selection of rental properties is location, or designated market area (DMA). The good news is that, according to John Burns Real Estate Consulting (JBREC) data published in August 2018, the single-family rental share of the overall rental market has been steadily increasing nationwide.
Since 2006, the market share of SFRs has grown the most in Phoenix and Atlanta, gaining an additional 11 percent share of the rental market. And in Riverside-San Bernardino, single-family rentals now comprise a whopping 49 percent of all rental units.
Currently, JBREC ranks Las Vegas as the number one SFR market, boosted by strong rental and home price appreciation, and steady job growth. The top five strongest single-family rental markets are:
Salt Lake City
Though it sits in third place in the current rankings, Salt Lake City has earned the top spot in JBREC’s future rankings, propelled by strong rental growth and home price appreciation forecasts among large markets. Consider investing in up-and-coming markets like these to boost your SFR portfolio.