Millennials rent and why you should care.
Every generation since the boomers will say they got the short end of the stick. For each generation it’s true to an extent. The millennials really did seem to get off to a bad start. The outcome for many is that they can’t afford to buy a home. Millennials rent as a result. Another reason some Millennials rent is that it’s a choice.
This isn’t a grind about how a generation didn’t get a fair shake. It’s about why Millennials rent, and some will for most, if not all of their lives. This matters when you have a rental business. It’s job security. In addition, Millennial renters are advantageous to your ROI. Their wants in a rental property are minimal compared to earlier generations. Renters that are satisfied with less are good for business.
Why Millennials Rent
To start with, many millennials came into the workforce during the great recession. There was a lot of competition for a diminished number of positions. If one got a position at that time, it probably didn’t have great wages. This was true despite Millennials being better educated than any previous generation. Thirty nine percent have a bachelor’s degree or higher.
Double the Millennial households came into the workforce with student loans . The student loans were 50% larger also. They’re an obstacle to Millennials being able to afford a home.
The earnings problems are larger for millennials with some college or only a high school education. They earn 7.5% less than boomers did in 1982 with the same education level. This is 7.5% less in numeric terms. The dollars that Millennials are earning today is drastically reduced in purchasing power compared with 1982 dollars. It takes $2.73 in today’s dollars to equal one dollar in 1982.
This means that Millennials with less than a bachelor’s degree are having greater difficulties purchasing a home than those with a bachelor’s degree or higher.
Millennials That Prefer to Rent
There are a small but noticeable group of Millennials that prefer to rent. One authority contradicts another on how many. The biggest reason is mobility. Millennials are moving for jobs also. Some are moving to be in a more urban location. Millennials want to be close to shopping and gathering places according to statistics. These places can be unfordable to purchase in. Rather than sacrificing access, Millennials will rent.
Millennials Value Mobility
According to an article in Forbes, 57% of Millennials hold travel as their top priority. Also, forty nine percent would quit their job within two years. Only 28% of Millennials surveyed would keep their job for five years. These are not people that want to be tied down with a mortgage.
Another significant statistic is that Millennials will soon be the largest living adult demographic group in the United States. This is larger than Generation X .
There are multiple indicators that demonstrate that Millennials will be customers in your rental business. They’ll soon be the largest single demographic group in the United States. They value mobility over security. They are more educated than any previous generation. Therefore they are more likely in a position to make a living wage. They desire experiences more than material goods.
What do Millennials want in a domicile?
They don’t care for high maintenance landscaping. Landscaping appeals to the older generations. Millennials would like to have a simple area to enjoy pets. They don’t want large areas that require maintenance. They want areas that are easy to maintain. This benefits the investor. If the most likely customer for your property doesn’t care about landscaping there’s no good reason to spend time and money on it. Besides, it’s one less thing to have problems with.
Millennials don’t want a specific dining area or room. They consider it a waste of space. They prefer to eat in the kitchen. Most single family rentals have a dining area. This doesn’t have to be a problem. This could be marketed as an office space instead of a dining area. They can walk out of the kitchen with a plate of food and get back to work.
If you’re remodeling a structure or building from scratch worry less about individual rooms. Millennials would rather have large open spaces that open up into each other. They prefer spaces that perform more than one function.
Don’t replace carpets, except for in a bedroom. You can save money with Luxury Vinyl Flooring (LVF). It’s attractive; more durable than carpet and hardwood, and the ROI on it is excellent. Another benefit is that it’s pet friendly. Millennials enjoy their pets. Overall, 48% of renters have pets so it’s a good investment in the future regardless of who you rent to.
The End Game
Businesses need to know who their customers are. It’s a good bet that your customers will be Millennials. Many Millennials haven’t generated the wealth needed to purchase a home. Others don’t want to purchase. Their wants in a rental are fairly minimalist compared with previous generations. They want places that are easier to take care of. The Millennials will be the largest adult population, and they rent. This means fewer problems for the rental property owner and a higher, more consistent ROI.
To learn more about how Jacob Grant can improve your Passive ROI with all rental clients, call 208-795-8218 or schedule a call Schedule call