This Massive Demographic Will Become Hungry for Rentals Within 5 Years

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As a multifamily buy and hold investor, for years now I have heard endless talk of how Millennials are the renter demographic. They don’t want or can’t afford to buy their home, and we as rental owners should be targeting this demographic and appealing to their preferences. This may be true, but behind all this hype of the Millennial generation creeps this massive wave of rental demand from what has been the largest demographic for the past 50 years.

The Baby Boomers have been a background thought when it comes to renter demographics. As an active buyer, I believe this has left an opportunity in the market that other buyers are missing. As real estate markets around the country continue to climb and competition when buying increases with them, I have been looking for a way to break away from the herd and find an opportunity that the masses are not chasing.

What Do We Know About Baby Boomers?

It is my belief that over the next 1-5 years, Baby Boomers will be substantially underserved in their demand for rentals, specifically affordable market rate rentals that cater to senior living preferences. To clarify, this does not mean 55+ zoned communities, but rather market rate rentals that simply have characteristics that a senior would desire. In this article, I will back up that statement with real data and common sense to piece together these not-so-complex ideas that expose the opportunity that seems to be cloaked by the Millennial renter craze.

Lets start from the beginning.

  • Baby Boomers, according to the U.S. Census Bureau, are the demographic group born during the post-World War II baby boom, approximately between the years 1946 and 1964. This includes people between 53 and 71 years old in 2017. Over this period, over 76 million babies were born in the United States, and factoring in immigration, the current estimates of the Baby Boomer demographic are close to 80 million people.
  • In 2017, the median age of a Baby Boomer is 62 years old. In the United States, 62 years old is the first year individuals can retire and begin to receive social security benefits. Many Baby Boomers have lived their whole adult life aiming to retire between the ages of 62 and 66 using their social security benefits to support them in their remaining retired years. In fact, the math tells us that over 12,000 Boomers will be retiring every day for the next several years. [(80,000,000 Boomers/18-year age span)/365 days per year = 12,176 retired Boomers per day.] Of course, some of that figure will not retire, and some will die, but the point is not to be exact but rather to show that there is going to be a massive wave of retirees in the United States in the next 1-5 years.
  • Unfortunately, of those tens of thousands of retires per day, only a small percentage are actually financially ready to retire. Research by the Insured Retirement Institute shows us the likely financial strain for retiring Baby Boomers. According to the study, 24% of baby-boomers have no retirement savings—the lowest number since the study started in 2011. Only 55% of Baby Boomers have some retirement savings, and of those, 42% have less than $100,000. Thus, approximately half of retirees are living off of their social security benefits.

When I read that half of all retirees were going to be living off social security, my next question was, “How much is the average social security payment?” According to the Social Security Administration, in January 2017, the average payment is approximately $1,317.

So there is a wave of 80 million Baby Boomers that is cresting in 2017 and that will begin its peak retirement at staggering pace in the tens of thousands per day. But 74% of them are not financially ready to retire. Why? There is not a hard and fast answer to this question, but I believe it is a multitude of things. The 2008/2009 crash spooked many Boomers and had them selling stocks at the bottom of the market, resulting in them missing the resurgence of the market in the following 8 years. It could be that wages have been stagnant for 10 years; it could be that true inflation has been eating away at their savings and boosting their cost of living. Or maybe it’s just that the savers had such terrible interest rates to save in for the past 10 years. Maybe it’s all of these things combined. Maybe it was just mismanagement. It was probably a little bit of everything. Why it happened is less important than what needs to happen moving forward.

Related: How to Kick Your Business Up A Notch by Tapping Into “Baby Boomer Niche”

What Freddie Mac’s Survey of the 55+ Population Reveals

What will happen moving forward with the Baby Boomers? Well, fortunately, in July of 2016, Freddie Mac noticed the things I have mentioned above and conducted their first ever Freddie Mac 55+ survey of housing plans and perceptions to help answer that question.

Here are some key findings from that survey.

They plan to rent versus buy their next home.

Among those 55+ renters who plan to move again, 71 percent of respondents plan to rent their next home. For many, this may be a renter-by-choice decision, as 38 percent say they have enough extra money to go beyond each payday including for savings. Further, more than half (59 percent) think it makes financial sense for people their age to be renters. This view is held by 67 percent of multifamily renters.

Their top attractions are affordability and amenities.

Among the top “very important” factors influencing their next move, respondents picked affordability (60 percent), amenities needed for retirement (47 percent), living in a community where they are no longer responsible for caring for the property (44 percent), and being in a walkable community (43 percent).

They don’t want to move far.

Among those who plan to move again, 55+ renters would like to relocate to a different neighborhood in the same city (31 percent) or a different property in the same neighborhood (23 percent) compared to those who would like to move to a different city in the same state (18 percent) or move to a different state (24 percent).

As real estate investors chase the Millennials and cater to their lifestyle and renting desires, they are missing the opportunity to serve the massively underserved demand of the Baby Boomer generation.

The question is how does all this data translate into applicable real estate investing? This is where the common sense approach comes in. It’s pretty clear what this is showing us. There is and will continue to be a staggering amount of Baby Boomers entering in the renter market, and if you can meet their needs, demand will be so great that the probability for investment success will increase significantly. I believe those needs are catering to the senior lifestyle, while also remaining highly affordable, in areas that Baby Boomers already live. For our company, this means we look to purchase apartment communities with no steps, small unit floor plans, larger property footprints with more landscaping, and nearby grocery stores and medical offices.

Related: The 4 Social Networks You Need to Connect With Millennial Buyers & Renters

The trick is balancing these senior needs while also investing in a market where there is also growth in jobs and population. It is great if you can fill the needs of all the Baby Boomers for the next 10-20 years, but what happens when that ends? If you can satisfy the undeniable demand Baby Boomers have for the next 10-20 years, you will have one of the most predictably consistent renter demographics on the market. Do that in a market that also shows the fundamentals to maintain or grow past the Baby Boomer generation, and you are in line to make a terrific investment.

There is no doubt the Millennial generation is one to be watched closely, but the point of this article is to note that there is another massive trend in renter demand happening that is getting only a fraction of the attention it deserves. I would also argue that the Millennial generation is far more unpredictable than the Baby Boomers. We don’t know how they will behave. If we have one, two, or maybe three more years of strong economic growth and the Millennials begin to feel secure and have paid off some of their student loans, they may just decide renting isn’t for them anymore and decide it’s time to buy. I have no idea where that demographic is going to be in 5-10 years, but the Baby Boomers are more predictable—and when you are a long term buy and hold cash flow investor like us, predictability is very valuable.

We’re republishing this article to help out our newer readers.

Does your real estate business cater to the Baby Boomer demographic? Why or why not?

Let me know your thoughts on renter trends below!

About Author

Jered Sturm

Jered Sturm is co-founder and director of sales and marketing at SNS Capital Group. Jered began in the real estate industry in 2006, working for a successful real estate investment company as a handyman. From 2009-2012, Jered co-founded the construction company Sturm Properties. Using his background in contracting and construction, he began investing in “Value Add” real estate. Now, after co-founding SNS Capital Group, Jered has conducted over 10 million dollars in real estate transactions. He currently co-owns and operates a portfolio worth over 3.7 million dollars in investment real estate.


  1. Giovanni Isaksen

    Jered, with you on the Boomer rental market. The big challenge will be delivering attractive product at a price point that fits Boomers’ budgets. The upper-third, renter by choice probably will slot into Class A properties but that middle third living on SS and maybe a little equity from selling their home is going to be tough price-wise (The lower third will be in subsidized housing or living in their cars, not pretty but that’s the reality).

    Typically you want tenants paying less than a third of their income in rent but with retirees maybe that gets pushed to 50%. So for the Boomer living on that $1,370 SS check their max rent is $685 which won’t get much of anything in the coastal markets (where the majority of the population lives) so figure they’ll have to double up with a roommate to find a two or three bed for 1,370 and then live very frugally. With each only having 685 to spend on everything else; utilities, food, clothing, insurance, medical care (the big one, and if Trump care drive premiums up…) probably means no car once the one they retire with dies.

    So how do we deliver Boomer attractive one-beds at $685 and two/three-beds at $1,370 in a walkable neighborhood with good access to medical services? That’s the challenge we’re working on right now.

    • Jered Sturm

      I agree with your insights Giovanni. And precisely because of your thoughts we may also see a resurgence into the more affordable southeast and midwest markets. For example, I am actively pursuing a property in the midwest that average rents are $550 a door and average sqft per unit is 680. It is in a good area with all the things I mentioned in my article. You can check all the boxes needed, you just can’t do it in the coastal markets… Maybe another indicator of the tides shifting, maybe not. Time will tell. Also, the Avg SS benefits of $1370 are just that and average so in the coastal markets where median incomes are higher the SS distributions are likely to be higher there as well. As always time will tell.

      • Kevin McLaughlin

        Ryan – I would use 1.5 times the 1370 or 2055 as my base. That way you assume that any lower earning spouse is receiving 50% of the higher earning spouse. It is a more conservative approach, but is probably closer to reality than assuming both are getting the average.

  2. Gregory Jackson


    Nicely penned. I like your think-outside-the-bun theme here.

    Author Ken Dychtwald has written a bunch of stuff on longevity – including baby boomers — and how that impacts a variety of things. He’s also on YouTube.


  3. Great article. In there lies the problem I run across regularly. Affordability & walkability/location for retirees whose limited income Impacts rent levels. Identifying inplace product with the promise of upside for this occupancy class is challenging. As for development, getting the land right coupled with tax abatements and exemptions MAY produce a productive product but that’s to be seen. Retiring at a reported 10,000/day what will their option be?

  4. Jon Loca

    Thanks Jared for sharing. I’m curious as to how many seniors plan on moving in with their children? I know as my parents get older and fitting into the demographic of $1200 in SSI. I’d much rather have them move in with me (especially if I’m married with children) and save their money on rent, help around the house, and help watch children? To me its a win win, the parents save money, get to be close to family, and maybe create a sense of purpose and their children can have help around the house and with bills.

  5. Audrey Ezeh

    Great article Jered! My one concern with this demographic is being able to raise rents to keep up with the market and maximize cash flow! I’m going after a property now with boomers on fixed income and they pay about $150 less than market rates and the landlord still has trouble collecting rent from them. I’m all for renting to boomers as they will no doubt provide stability and less turnover and will generally take care of the property. How do you think an investor can overcome the issue? Thanks again for a great read.

  6. Chris Ayers

    Sounds like this is definitely the problem to solve, but I’m not sure a solid answer was found.

    Audrey had a good point on the fixed income. If people are living on SS, how are you going to raise rents? Do you have the heart to evict them?

    Are mobile homes in warmer climates the answer?

  7. Kevin M.

    Thank you JERED I have been thinking and researching this for a little while now great to hear like minded individuals. The tortoise was the one who won the race. I just having figured out how how the rent increase is going to work as homes appreciate?

  8. Bill Manassero


    Great article!

    There are multiple classes of real estate for boomers, from small single family homes to multifamily senior communities to assisted living, all of which a great potential niche markets for investors.

    I talk to boomers almost every day about the challenges they are facing (uncertainties about social security, health care costs and longevity) and, increasingly, many boomers are turning to real estate investing as a means to supplement their current retirement income. After all, who better understands the boomer market than boomers themselves.

    The boomer bubble is too large and economically significant to ignore! You might want to research the phenomenon that I’m witnessing/experiencing with boomers-turned-real-estate-investor!



  9. Bernie Neyer

    I’ve read a lot about the Boomer retirement curve. My brother, who was 11 years older and I are Boomers. My brother, who was 70 passed away this summer and the response was not to sell and downsize, but rather to call the family home and have them live there, and in addition to actually rent a room out. I have seen this happen previously.

    There has been considerable talk about a flood of houses hitting the market as Boomers retire or pass away. There are extensive mitigating factors though, one cited above with my brother’s family, another being that when my sister in law passes the house is inherited by one of the children who keeps, and still another is the life expectancy of the property. In older neighborhoods, the houses may have reached the end of their life span and it isn’t cost effective to renovate them, so they are scraped.

    Markets change, sometimes dramatically, over time. Everyone is touting multifamily as the investment direction, but no one is pointing out what happens if single family homes decrease at or near the rate proficized. It may then become cheaper to purchase than rent.

    Top that off with Millinials wanting something to call their own, and it will happen for them. The resulting run to the other side of the ship will cause a dramatic crash in multifamily rentals, and this time it won’t hit the average home owner, but the monied investor. This could cause a market but far worse than the one experienced 8 years ago.

  10. Curt Smith

    I’m a boomer and agree with this article completely. Yes there will be a need, but I don’t believe there is a solution today the matches the investors ability to make money with their LIMITED ability to pay rent and fees…

    Renting to fixed income tenants has lots of risks for the landlord. You’ll NOT get your rent if:

    – they have an unexpected medical bill

    – they have cash car repair

    – any number of unbudgetted expenses.

    Also you’ll not be able to raise their rent or be able to afford to do much maintenance since over time your net cash flow will choke down to a trickle as your expenses rise and their ability to pay rent increases is zero to negative. Since medical costs rise double digits where their income raises per the govs CPI, 0-3%.

    I don’t / will not rent to fixed income folks in my SFRs.

    IMHO The opportunity is in a larger facility with room sizes down in the 500-800 sqft range where you make money by packing them in… Will they be happy couped up? No, do they have a financial choice,, no.

    Without subsidized housing and zoning changes allowing for large facilities of very small mini-apartments there will be a big problem. Yes a need, but no I don;t see the solution being built.

    Every city is screaming they don’;t have enough low income housing, its going to get worse I agree.

    Refrigerator box cities? (not kidding trying to brain storm a solution to a math problem where it doesn’t allow for a traditional solution for housing for 2 people on $2500/mo or $1300/mo single to cover ALL living expenses, housing, food, medical, entertainment, travel…….)

    • Curt Smith

      My Myopia… All other countries solve this problem by multi-generations all living in the same house. The lack of funds, the lack of living choices, will force savings-less retirees to double up with kids or someone. I really doubt my proposed solution above will be what poor retires choose given their budgets (mini-apartments or refrigerator box cities under bridges). They will want to live with family members, packing them into some family members housing. Causing the buidling of mother-law suites or tighter living (as many nations consider normal).

      It may not be clear yet how this problem and path of these penniless folks choose. Its a problem in the unfolding stages. But yes there is a problem in the works!

  11. Joe Scaparra

    This article is spot on!!!! Now that you have this information and if you believe it, then you can use it to build WEALTH. But you have to ACT.

    Boomers are retiring at record pace as indicated in this informative article. However, most are not financially ready and they will be FORCED to downsize and lower their standard of living. So how can you position yourself to help the Boomers and be financially rewarded at the same time.

    Invest in areas of the country and types of properties that Boomers will be retiring to. Boomers want smaller homes that are ONE story, with small yards that require little to no up keep. The properties have to be affordable.

    Solution for me: Buy Duplexes in Texas!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
    Only buy single story as Boomers don’t want to climb stairs and many will not have the health to do so.
    Modest units approximately 1000 square feet, kept clean and updated, they will be very attractive.
    Currently renting for $1200 or below.

    Boomers will be your best renters! They will have frugal life styles and they will prioritize their rent payment first! They will have less wear and tear on your property. You may find two Boomers living together for affordability, especially if all they have is their individual SS checks.

    Buy duplexes in warm states as they are benefiting from the migration of Boomers in the north retiring to warmer climates!!

    My duplexes remain 100% occupied but mostly younger generations. I expect in about 10 years or less, I will see a big transition of my renters become boomers.

  12. Joseph M.

    In my own market I don’t get the feeling that REI is chasing Millenials. In fact, quite the opposite. Almost every single new MF building start is for 55+ senior communities. The remainder that aren’t are either more generalized apartments or family friendly townhomes. The Millenial build factor tapered off in my area with flattening college enrollment rates.

  13. Michael Waddington

    Enjoyed the article and agree with the findings! You know…NOT all of us Baby Boomers were blind at the need to prepare for older years and retirement! Being 65 and divorced at 41 years took a long time to right the ship after that! THEN….at 57 in 2008-9, lost close to ALL assets in personal/business Bankruptcy as a small RE construction builder! We hear endless talk about Collusion on the political front…BUT the REAL COLLUSION was the Federal Government and the Wall Street Banks! They were the ones that destroyed us and ruined my intended retirement! I will endure to finish strong but just know that NOT all of us approached later years without a Plan in place!

  14. H Julian

    Interesting article! During a recent document signing in San Diego area, our Notary told us that unfortunately, the majority of the signings she does as a Notary is for Reverse Mortgages. Of the retirees who own their own home and have adequate equity in it, this would allow for no more mortgage payments…just maintenance, property taxes and insurance….at least in our southern California area, this would allow for less monthly expenditure than renting. I know…Rich Dad portrays owning a primary residence as a negative thing, saying it is not an asset. That may be true to validate his point of the book, but look at the benefits provided to those who are able to stay in their own homes and perhaps even take cash out via a reverse mortgage. Of course, the numbers will work differently in various locations. It makes sense to me that many who own their own homes will opt to continue to live in their own homes or downsize into a smaller home that they still own, and/or move to a less expensive part of the country to own. It also makes sense to me that if one has rented for most of his/her life, renting will continue to be the case in most cases. BTW, I am not advocating reverse mortgage (I hope I never have to do that), but it would sure beat having to live in a small box.

  15. LaStarr Heiliger

    Interesting approach to a niche market. However, living in an area where there are many senior renters ( middle income/ blue collar) there are some factors not addressed.
    If a senior moves in at retirement,67-70, they will probably maintain a home. However, as time, pfysical, mental issues raise their ugly heads there will be the increased maintance calls for middle to minor items. This will be more prevalent for single woman, who don’t have a husband to do the repairs, or can’t afford a handyman. Many times the mess left by seniors is far worse than younger inconsiderate renters. and many times, the kids aren’t helping, or are too far away to know.
    Someone else mentioned the unexpected expenses that would affect the ability to pay rent, not just for a month, but for many months, as the unexpected is far more expensive for seniors. I am not sure it is the “silver” lode, we might want to think it is.

  16. John Sharpe

    The simplest step to take to be ready for this wave is invest in properties that don’t have stairs (if a SFR at least have one bedroom and bathroom on the ground floor). Being a pet-friendly landlord is also a big help.

  17. Moriah Lee

    Hey All- such an informative post- thanks! Does anyone know of the gov’t subsidy process for rentals? Ex: If you were to build an assisted living type of rental property meeting the above criteria, do subsidies exist for renters? What do landlords/RE investors need to a) do to qualify, and b) know about these subsidies?

    Thanks BP Family!

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