Millennials will shape the future of your rental business and here’s why:
The millennial generation, or Generation Y, is the generation born in the 80’s and 90’s and they make up about one-third of the population. As a millennial myself, I can tell you we grew up during the birth of technology and we’re generally known as the ‘on-demand’ generation. Meaning we want what we want, and we want it now.
Millennials are coming of age when it was once thought purchasing a home defined the “American Dream” but that’s seemingly not the case for my generation. A recent report by the National Association of Realtors (NAR) suggests that the number of first-time homebuyers has reached its lowest level since 1987!
So what does this mean for your property management business and why is it important? It means we’re not buying our first home until much later in life and as a result, we’re taking the rental market by storm.
So why are Millennials becoming known as “Generation Rent”?
1. They’re living ‘in the red’
According to PNC Financial Services, the average millennial is nearly $45,000 in debt and much of that is thanks to student loans. Forbes recently reported that 1 in 10 college graduates carry over $40,000 in student debt, alone!
Now, it should really come as no surprise that banks factor in student loan debt into one’s debt-to-income ratio when evaluating creditworthiness to obtain a mortgage. As it turns out, this is making homeownership a bleak possibility to those just graduating college and struggling to find jobs that pay high enough salaries to get this debt paid down. In fact, the rate of homeownership is 36% less among those who are working to repay those student loans!
2. They saw it all go down (literally)
Many in my generation are just graduating from college and starting out fresh in our careers, unsure of where life will take us. I can tell you from my own experience that many millennials feel like in order to climb the career ladder, you need to be flexible and willing to jump on any new professional opportunity that comes along (especially if it comes with a better salary). This lies in direct conflict with seeking the stability of homeownership.
Let me explain further…
Our generation witnessed the housing crisis and many of our parents and families lost hundreds of thousands of dollars when the value of their homes plummeted seemingly overnight. By the end of 2008, home prices dropped a record-breaking 18% in just one year . This will surely make anyone skeptical of purchasing a home when they’re just starting out and seeking that flexibility and freedom. Since we’re not necessarily settling down right after college, we don’t need to buy our first homes right away either. If we may not be in an area long-term, we certainly aren’t buying after the housing crisis!
3. They’re assessing the risk
Renting is viewed as the more affordable option to millennials for a few reasons. Mainly, in order to purchase a home you’ll need to have that down payment in the bank. Oftentimes becoming a homeowner also means making compromises. For example, say you want to live in this awesome neighborhood because it’s close to everything and has an incredible pool, clubhouse and state-of-the-art gym. Home ‘A’ is available to purchase at the price tag of $400,000 and home ‘B’ is for rent at $2,100/month. In order to purchase that home you may need to have anywhere from 3.5%-20% down and commit to a lengthy mortgage. You’re just starting out and unsure about the future. What do you do?
In the eyes of the millennial, you will most-likely snag that rental up revisit your wants and needs (and the market) at the end of the lease. Simply put, it’s just less of a risk.
Here are 3 easy to implement tips to get you started with marketing your rental properties to millennials
Millennials are going to become a thorn in the side of your rental business unless you’re prepared to embrace some change. Marketing your rentals to the millennial generation involves a fresh approach, creativity and most importantly technology.
Tip #1: Have a strong online presence
-Start by doing a Google search of your company so you know where to improve (especially if you can’t find yourself, or find bad reviews). Ask a relative or friend to review your website and make sure it’s friendly to the end-user
-Cover your social media bases with a strategy for success
Tip #2: Make your listings “clickable”
-Write enticing ad copy that make renters want to contact you to learn more
-Ensure your photos showcase the property in the best possible way
Tip #3: Cater to the on-demand with technology in your business practices
-Get your application & tenant screening process online (RenterResume offers this for free)
-Make your lease easily accessible & enable e-signatures (DocuSign, etc)
-Accept rental payments online (williampaid, etc)
Remember, the best renters are always snagged up quickly so make sure bring your ‘A’ game!