Renter Nation: Millennials Destined For Lifetime Of Leasing
by Bill Zahller | in Blog | 0 comments
A new survey re-confirms the rumors about millennials and their housing. Who stands to benefit the most? What must millennials do to survive?
Opting Out of the American Dream
According to new data from Apartment List and Crain’s more millennials say they plan to rent for their entire lives. They never plan to buy homes.
They’ve seen their parents go through 2008, and aspire to a freer and more flexible lifestyle.
While this may appear to make economic sense for many right now, it could be problematic later. It’s hard to buy a home when you are overloaded on student debt, and the jobs you were promised are much scarcer than your admissions team let on.
For some, this may be just a part of the typical cycle of life and how all previous generations have felt when they were young. However, without the concrete security of real estate to back them up, many are going to miss out on a lifetime of the benefits of homeownership. That includes kids performing better at school, financial security, higher earnings and more wealth.
Those Who Want to Buy Can’t Afford it
Unfortunately, even among those who do aspire to own homes, very few are on track to be able to afford it. If they can’t afford it now, before house prices rise further and interest rates rise from historic lows, they may miss the chance of a lifetime.
Only 10% of millennials reportedly have at least $10,000 saved that could be used towards a down payment on a home of their own. That isn’t going to go far in many markets. It’s not even enough to get into a new rental in many expensive cities.
What it Means for Real Estate Investors
Although this trend is sad in many ways, it is also great news for rental property investors. It means captive clients for life.
In a few areas harsh rent controls, regulations, and taxes may see more property taken over and turned into public housing projects to house this generation. We know how well that hasn’t worked out in the past. Though even in Austin, Texas local governments are going down this path, and millions are being to house the homeless in tents.
Everywhere else, multifamily investors control the market. They control the rents and housing costs. People need shelter. That will never change. Rents will keep going up. If they aren’t buying homes, millennials will have to pay whatever the going rate is. Even if that is well over 50% of their income each month.
For investors, owning rentals is like being able to print your own money each month. As control over the land and real estate shrinks into fewer hands, we’ll see much more inequality in wealth and incomes. That may not sound nice, but you have to decide which end you want to be on.
Why Millennials Should Invest in Real Estate
Even those who choose not to buy and own homes need to invest in income-producing real estate. It may be their only way to stay afloat and get ahead.
It is going to be key to avoid this current financial trap. Without it, you are giving up passive income, the ability to keep up with inflation, many tax-saving benefits, and the ability to build wealth. Considering it now already takes earning over six figures to afford the average rent in some cities, investing in real estate may be the only accessible tool for keeping up with your rent and keeping a roof over your head in the future. You don’t have to live there, but you need everything else it can do for you.
ABOUT THE AUTHOR
Bill Zahller is the Managing Partner of Park Capital Partners, LLC and resides in Asheville, NC. As a Multifamily Real Estate Investor and Syndicator, he founded Park Capital Partners, LLC in 2016 after 14 years involvement in real estate investment. He works with accredited investors and professionals who are interested in real estate investment, diversification, and financial freedom.
Bill has been flying since high school. His father was a Naval Aviator and Captain for TWA. Bill has been flying professionally for over 25 years, 23 of those at his current company. He has accumulated over 12,000 hours and 7 Jet type ratings. He has also held Instructor, IOE Instructor and NRFO pilot positions with a large fractional flight company. He is currently flying the Global 6000 in a long range mission capacity. This keeps it interesting – one week its Beijing or Sydney; the next Rio or Rome.
Bill is also the founder of the Asheville Multifamily Investor Club. Visit www.ParkCapitalPartnersLLC.com for more information.
No comments yet, but you can be the first