Lender · Laguna Niguel, CA · Member since 2018 · 9 posts · 6 votes
I am a "Millennial" looking to invest in rental real estate and every time I talk to someone my age about my real estate investing goals they look at me like I'm insane! So that got me thinking, for a lot of Mellennials buying a home is a distant dream. SO...... what does that mean for us investors...... it time to capitalize! What is it that Millennials look for when choosing a place to rent, because lets be honest they're not buying. What are the must haves and what can they do without? What cities are they leaving and what cities are they entering? I have my thoughts on these things but I want to see what everyone else thinks
As the father of two beautiful Millennial daughters, I can relate. I offered each of them their own single family house, free and clear to live in, here in NEPA. Answer: "No thanks, Dad."
They choose to live in Brooklyn, NYC. One is an artist, the other a graphic designer in on-line advertising. One lives in Williamsburg, a Millennial 'ghetto', and pays $2500/mo for a ONE BEDROOM APARTMENT! Plus utilities.
It is THE most trendy area--small bistro restaurants, craft beer bars, used clothing 'boutiques', and 1 block walk to the subway.
The other lives in 'up and coming' Bed/Sty. That's Bedford Stuyvesant for those outside the city. Used to be (and in some blocks still is) a run-down, drug infested mess.
But there are signs of life, too--REAL art wall murals have replaced the typical gang graffiti; specialty coffee shops open next to bodegas, art galleries opening, and blocks and blocks of beautiful brownstone buildings.
Rents there are lower; but in these areas my daughter and her friends choose to rent a large apartment and all live there, each has a room, and/or a roomie.
I’m a millennial. I have 3 rentals already. I’ll have more than 15 by time I’m 30. And they say the American dream is dead! Ha.
It’s just evolving. Millennials are flocking to cities like Portland, Denver, Memphis, Nashville. They want hip and vibrant cultures usually.
I’m also a millennial, and I have 11 rentals / 21 units. I believe real estate is the simplest way to achieve financial independence. But I agree, most of my peers are definitely not interested in this space unfortunately. I agree with @Caleb Heimsoth, millennials are drawn to trendy cities with vibrant cultures. However, as we start having families, I think this trend will reverse, and we will start moving back to the burbs.
Millennials will pay for convenience. So prime locations that are walkable and/or has convenient parking.
Having laundry in the unit I think gets superior rents and might be one of the highest ROI upgrades.
The rental should have a modern feel vs. an old house feel. So things like overhead lighting, plenty of outlets, and ample closet space in my mind make a big difference as well.
Depending on the rental pool and where it is in the country, central air might make a difference as well.
As the father of two beautiful Millennial daughters, I can relate. I offered each of them their own single family house, free and clear to live in, here in NEPA. Answer: "No thanks, Dad."
They choose to live in Brooklyn, NYC. One is an artist, the other a graphic designer in on-line advertising. One lives in Williamsburg, a Millennial 'ghetto', and pays $2500/mo for a ONE BEDROOM APARTMENT! Plus utilities.
It is THE most trendy area--small bistro restaurants, craft beer bars, used clothing 'boutiques', and 1 block walk to the subway.
The other lives in 'up and coming' Bed/Sty. That's Bedford Stuyvesant for those outside the city. Used to be (and in some blocks still is) a run-down, drug infested mess.
But there are signs of life, too--REAL art wall murals have replaced the typical gang graffiti; specialty coffee shops open next to bodegas, art galleries opening, and blocks and blocks of beautiful brownstone buildings.
Rents there are lower; but in these areas my daughter and her friends choose to rent a large apartment and all live there, each has a room, and/or a roomie.
Marc Winter your daughters may be different but if my parents offered me free rent or living accommodations I’d do that in a heartbeat over paying 2500 rent.
Unfortunately my entire family lives in the cold Midwest and after moving away at 18, I’m not about to go back there. So I have to fend for myself lol
I'm a millennial as well and am just getting into the investing game - haven't bought my first property yet but I will within the next 3 months.
I agree with all the above - we want convenience and will pay for it, being close to the social scenes (bars, restaurants, greenways, golf courses, easy commutes, etc.) is very important!
I live in Nashville (originally from Memphis) and it's a millennial hub as seen by the insane prices around here. The city's appeal is the continuous flood of new restaurants opening, the music scene, a festival or 5 every weekend, easy access to beautiful city parks and walking trails and paths, an easy airport to connect quickly, and that ole southern hospitality. It's big city amenities in a mid-size city (at least for now).
We are voting on a huge new transit system in May that will allow for light rail to be built in hub and spoke form with the city center as the hub making access from the outskirts potentially easier. Not sure if it will pass or not as it will also raise taxes, but if it passes then look for even more growth near the new light rail transit hubs - especially for those millennials!
Memphis seems to be lagging behind a bit on the millennials train compared to Nashville which is why I believe it's still a great place to invest - the prices are much cheaper than Nashville. If you can find somewhere that has all those extra pluses that appeal to us younger folk - we'll pay!
A similar question came up in the AZ REIA meeting recently. One thing that was suggested was a highly connected house. High speed internet, nest thermostat, ring doorbell, etc.
@George Pauley that’s also true as I made my entire place connected. From the amazon dot to the tv to the lights. All can be controlled with my voice or phone
@Marc Winter's story is very familiar. The millennial generation wants convenience and are willing to pay for it. Some in this group want to so convenient that they don't need a car. That means close to urban hubs (if that applies in your area), close to mass transit, work, shopping, dinning, and entertainment. They are young and healthy, so access to green-ways, gyms, and parks is a nice plus. If you are building, they are not afraid of steps; here in Nashville new 3 and 4 story homes are going in (with roof top decks) so they can fit 2 on a lot and give them a view. Just make sure you can have ultra fast internet.
No price can replace ‘living’, and being in Brooklyn is a lot different living than being in Cary, NC.
Visiting will never be ‘living.’
So your daughters can experience their life and then choose something different later.
I don’t see any real difference between the millenials and other higher end renters. They all would like the same things- convenience, cleanliness, updated electrical/cable.
I have 2 units rented to millenials and when I hear people talk of them I am reminded of the sweeping generalizations about gen x. These kids work like dogs, long hours, so being in the downtown where conveniences are is great.
The one constant between all of them is that their parents are very much involved in the process. They want to be sold on the property as well- which for me is easy. But they are a part of the process in a way that my generations never would have been.
I will tell you that Brooklyn has hundred of thousands of Millennials living all over the City with several concentrated enclaves.
I just approved a Lease for a 2 bedroom, clean but not renovated 1 bath apt for $1,900 in East Bed-Stuy. East Bed-Stuy is not really a great place to live but is close to the Bushwick Millennial enclave.
Several years ago, that apt would have only been around $1,400 per month or less and you would have had to rent it out to either a subsidized family or subpar qualified couples.
The 2 Millennials that decided to roommate had their Dads as Guarantors. The Combined income was over $350k per year.
I can't tell you how many Investors I have known for the last 20 years miss the boat because they couldn't find themselves "Betting" on the trends.
I think if you can put your fingers on the pulse of the Market, you can easily beat the averages, by FAR.
However, not everyone has that kind of risk tolerance.
Stuff I've noticed makes millennial jump at my units...
-That I'm "like them". I'm here in my big glasses and hoodie, live down the street, point them towards the best burritos. I'm not a big company, I'm not a jerk. It goes really far. I definitely make my out of town partners the bad guys on any decision they don't like, sorry guys!
-Being able to feel like it's really their home. Sure you can turn that neglected flowerbed into a veggie patch. Sure you can have a dog, here's the (reasonable) pet rent bill and a box of treats. Sure you can paint a wall, just run the color past me so I know I can paint over it easily if you leave. (And yes, it will come out of your deposit.) Sure you can have a barbecue, just let me check with the city. And now that you're so settled in, how about a multiple year lease?
-Small units are in huge demand. I have 3 efficiency units and wish I had 30. The tiny home generation loves these.
-Definitely want the artsier and trendier neighborhoods. Murals, breweries, and bike parking are good indicators. But being close to their jobs is an even bigger deal.
-Neighborhoods that are walkable/bikable or have great public transport (big ask for Cleveland) are very popular. Low cost of living is the thing that draws young people out to the Midwest, and we want to keep it as low as possible.
I can't tell you how many Investors I have known for the last 20 years miss the boat because they couldn't find themselves "Betting" on the trends.
I think if you can put your fingers on the pulse of the Market, you can easily beat the averages, by FAR.
However, not everyone has that kind of risk tolerance.
Many say that buying for appreciation is simply gambling. But someone with their finger on the pulse of a market like NYC probably knows a sure thing when they see one.