If you are a landlord with a handful of properties in your town, I don’t recommend spending a lot of time studying macro-trend reports. What’s happening in your area is much more important to your cashflow.
Still, taking a look at what experts say is going on around the country can give you an idea of the overall long-term state of the rental market, which last year looked pretty good with a 4.6 percent growth rate. And there is no sign of it slowing down.
According to a recent report by the Mortgage Bankers Association (MBA), by 2024, demographic and economic changes will bring what could be one of the largest expansions in the history of the U.S. rental market.
The MBA claims baby boomers will drive that increase, with 33 million more renter households in 2024 headed by someone 60 or older than there are today. That’s because as boomers age, they’ll want to downsize into smaller, maintenance-free, living that rental housing offers.
What does that mean to you as a landlord?
The rental market is good now and should continue to grow with newly-employed millennials pushing that growth. However, based on the above forecasts, the longer-term growth will continue due to demographic shifts rather than the economic cycle.
As you consider investing in a single-family house, a duplex, or an apartment complex, picture what your prospective tenant will be looking for a few years from now so you can keep ahead of the curve.
There’s a good chance she’ll be in her late 60s or early 70s. She just sold her home and doesn’t want to be bothered with all repairs and the maintenance that come with home ownership. She’ll want to be near a hospital, doctors, a grocery store, and an airport. An elevator for above ground-level apartments is a must.
A park within a short walking distance will be important. Plus she’ll need an enclosed parking space or at least an easily-accessible bicycle rack. And you’ll have to allow her to have a small pet. Security will also be at the top of her list, which could mean providing a security system for the home and exterior lighting. Free Wi-Fi to keep in touch with children, grandchildren, and friends would be a plus.
Keep the above features in mind when shopping for a new property. You might even consider adding one or two of them to your existing rentals to put you a notch above the competition and justify a higher rent.