There is great news for real estate investors – more people prefer to rent in today’s housing market. In the past, studies have shown that millennials are the only demographic that will continue to rent homes at current levels, but new research released by Freddie Mac Multifamily finds that other segments of the population are not interested in owning a home, including baby boomers and Generation Xers.
According to the Freddie Mac study, “… the spring Profile finds a total of 67 percent of renters view renting as more affordable than owning a home, including 73 percent of baby boomers (aged 53-71). Similarly, 67 percent of renters who will continue renting say they will do so for financial reasons—up from 59 percent just two years ago.”
Why People Are Renting
The large number of people preferring to rent a home is unprecedented, leaving many people wondering why they are doing so. “Perceptions of affordability and cost continue to play an outsized role in the choices of America’s renters, as they overwhelmingly see renting as more affordable and the right choice for them – right now,” said David Brickman, executive vice president and head of Freddie Mac Multifamily. “Remarkably, half of baby boomers who rent do not anticipate owning a home in the future, with a growing number of Generation Xers following suit. Indeed, we are witnessing an historic shift in preference among older Americans, as they increasingly are choosing the size, convenience and affordability that renting offers over ownership.”
Indeed, we can no longer identify “who” a renter is – everyone seems to be renting.
People tend to rent because they are not staying in one place for a long time, and they don’t mind moving. People no longer stay in a job for 40 years anymore, as fewer people are getting married and fewer are having children.
What Renters Want
Increasingly, renters believe they will never purchase a home. They also don’t want to move, which almost ensures continual income for real estate investors. An investor can get a tenant that stays in a home for years, creating stability and a constant stream of revenue.
According to the Freddie Mac study, renters continue to be happy with their homes. 66% are satisfied, which is up 6% in the last year; and 64% do not plan to move, which is up from 49% in August of 2017.
The study also found that “a majority of renters – 54 percent – continue to believe that renting is a good choice for them now, including 71 percent of millennials.” Also, renters continue to want nice homes with updated features, particularly in kitchens and bathrooms.
Great News for Real Estate Investors
The Freddie Mac report is obviously good news for real estate investors. More people renting nicer homes for longer periods of time creates a stable environment for investors to grow their business.
As more people choose to rent, staying in the same rental home longer, real estate investors can generate higher profits resulting from lower vacancy rates and possibly lower maintenance costs. Besides generating higher profits and building their portfolio of properties more quickly, more stable tenants can also result in a less stressful life.
Mortgages for Investment Properties
Getting a mortgage for investment properties can be more difficult than an owner-occupied property.
Marimark Mortgage simplifies the process, with loan originators who are uniquely qualified to help real estate investors navigate their financing by providing mortgage solutions specific to the needs of investors.
We have mortgage products specifically designed for investors that can help boost investment profits. One of our most popular products for investors is our “delayed financing” program which allows investors to buy properties for cash and quickly refinance to take cash back out of the property to purchase another. We also offer programs that allow investors to purchase a property based solely on the expected cash flow of the property. This program can eliminate a lot of the income documentation and debt-to-income ratio issues for investors.
Related: Mortgages for Investment Properties
Marimark Mortgage serves the mortgage needs of real estate investors in Florida, Virginia, and Pennsylvania.
We specialize in delayed financing, cash-out refinancing, conventional home mortgages, FHA, VA and USDA mortgage options, refinance loans, and reverse mortgages. We’ve worked extensively with cash-out refinancing, and help clients with HARP refinancing to lower their monthly mortgage payments.