It’s not your father’s real estate market any more. Time was, the people who rented housing, be it apartments, houses or units in a duplex or triplex were usually people in transition, renting housing for the short term until they could save up enough money to buy a place, or committed free spirits refusing to be encumbered with all the trappings of homeownership. But in today’s expanding rental market, the profile of renters has changed considerably. And for those putting Jason Hartman’s commandments for investing to work in buying income property, knowing who those renters are can affect the choice of properties as well as providing clues about how to keep those properties rented.
In many areas around the country, the pool of potential renters is growing, thanks to changing economic circumstances as well as the changing landscape of the many local and regional housing markets. The typical profile of a house renter in the past was a couple or family who were renting a house for a short while until they could scrape together the down payment on a house of their own. People with little interest in eventually buying a house generally opted for apartments.
Today’s market includes those people too, but renter profiles gathered by real estate analysts and the US Census Bureau reveal that other groups are represented too. One of these, of course, is people who are more or less permanent renters. These renters typically have jobs and possibly families as well, but thanks to chronic low wages and a general lack of options, they’ll most likely never be able to collect up enough money for a down payment, or qualify for financing to buy the home.
Another, growing group of potential renters consists of those who actually lost their homes in the great housing collapse. Used to living in houses, they tend to gravitate toward renting single-family homes rather than apartments. These renters most likely will see the house with the eyes of an owner, and take an active part in taking care of the properties. Some may have hopes of getting back into homeownership after a foreclosure or another kind of distressed property sale.
If the state of the housing market has created new classes of renters, so too has the changing employment picture. Younger workers struggling with unemployment and paying down crushing student loan debt are now finding jobs and moving out on their own, many forming their own households with a spouse or partner. These renters tend to opt for renting a house, though many young professionals gravitate toward apartment-type living.
However disparate these groups may be, they all share something in common: an iffy credit history. Those who have just lost a house to foreclosure may be in bankruptcy or have a compromised credit profile. Younger workers may not have been able to build a credit history yet. And a growing number of renters are those who have recently immigrated to the US and haven’t been able to get credit either. Because most renters have less than perfect credit, other factors must be considered: stable employment, appearance, references, or even the look of their vehicle.
In general, renters are as diverse as the markets they live in, but due to the economic downturn that robbed many people of their homes and jobs the one hand, and the upswing however slight in employment, on the other, investors following Jason Hartman’s advice to diversify holdings will be able to find renters in whatever markets they choose.
The Jason Hartman Team
