They’re calling it the ‘renter tsunami” – a wave of Americans choosing tot rent rather than buy homes that’s fueled by two key demographic groups: millennials and the newly retired. Although these two groups may not appear to have much in common, their desire to rent is driven by some common factors – and that’s good news for investors in income property.

Conditions for baying houses remain pretty favorable in spite of slowly rising interest rates and home prices, and more stringent requirements for mortgage applicants. Even so, the number of renters continues to rise. And while some have been forced out of homeownership because they lost a home to foreclosure in the housing collapse, or because they simply don’t have the finances or creditworthiness to support a home loan, it’s the under-40s and over-60s who are choosing to rent for the long term.

Student loan debt is one factor that keeps some millennials and others in their general age range from buying a home or taking out a loan on other big-ticket items, but that’s not the whole story. For many young professionals the ability to be mobile is a major career asset. Being able to relocate for a job looks good on a resume and enhances hireabilty in some fields. And while a significant number of people in this group say they’d like to own a home someday, the emphasis is on “someday,” when they’re ready to settle into a stable career and have a family.

On the other end of the generational spectrum, a growing number of retirees are choosing to rent for the same reasons: mobility and no need for a family friendly home. In some markets around the country, those larger, post-starter homes are hitting the market as their owners opt to travel or downsize to accommodate an empty nest.

Increasingly, members of this age group are abandoning suburbia for the city, too, citing easier access to services and better access to events and activities. And they want to be mobile, too, with the option to move easily at short notice.

Relatively affluent and generally reliable, millennial workers and baby boomer retirees play a major part in creating the new wave of renters. For investors building wealth in income property as Jason Hartman advises, these two groups may be potential tenants worth watching.  (Top image: Flockr/emilystaubett)

Jason Hartman is the complete solution for real estate investing. Read more from our archives:

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