The Everest Newsletter: Residential, December ’18 Edition
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Just the Peaks This newsletter, at a glance
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The rental industry will see some surprising changes next year
Get the rundown for an early leg up on the competition
Over the past few months, Everest has examined the fluctuating buyers’ market and other residential real estate opportunities facing homeowners and investors across America. As we look forward to 2019, there may be a particularly promising corner of the market to consider. With home values on the rise, the rental market is about to heat up for both apartments and rental homes.
Call it growing wanderlust, the Airbnb effect, or something else altogether. Fact is, freedom of mobility now tops the charts for more families than ever. For your apartment or home, this spells an oil well of passive income!
The better news is that renters want more than just affordability. In 2019, experts anticipate renter satisfaction to be a top concern. As a property manager or rental owner, this creates a real opportunity to value-add without adding expenses.
FOR RENT: Cool space, custom experience
Let’s start with a bit of perspective. In 2018, Buildium surveyed thousands of property owners across America. The report revealed some interesting industry statistics pertaining to resident retention, demographics and expectations. But stats related to investor portfolios were especially telling: roughly 90% of property managers still anticipate revenue growth through 2020.
So, how do you capitalize on the renter boom? In short, the manager of tomorrow should meet renters’ desires for online payment options, easy communication, and the personalized service we all wish for. Likewise, 2/3 of owners say they want some kind of online platform where they can monitor financials, stats and systems related to their properties in real time. As a manager, investing in such savvy tools may be the key to staying relevant.
By the way, these new trends aren’t only geared toward tech-happy millennials (America’s largest renter segment). The desire for ‘custom service’ ties back to some notable shifts in the market at large. Chris Litster, CEO of Boston-based Buildium, says, “People are renting later in life than ever before—a result of [a number of] socioeconomic factors. In addition, a more diverse group of households are renting their homes rather than buying them.”
- According to ApartmentList, 91 out of 100 of America’s largest cities have experienced rent roll increases from August of 2017 to August of 2018
- Although peak rental season occurs in summer, landlord surveys still report an average of 2 applicants per vacant property listed and advertised
- The Census Bureau says that 36.6% of all people rent, which is the highest rate in 50 years; 65% say the decision is financial, while 32% say it’s preference
- Today, individual investors represent nearly 75% of rental properties, although non-individual investors have been on the rise since 2001
*Stats reported by TransUnion
How to please beyond price
Industry gurus agree that 2019 will be a transformative period in U.S. real estate. The buyers’ market is expected to stay competitive, while tech integration and new startups continue to automate the industry. Describing the future climate for landlords, Curbed magazine refers to next year as “the apartments arms race.”
Top-tier renters (especially city dwellers) appreciate and pay for once-exclusive amenities like rooftop decks, onsite parking and swanky gyms. They will also look beyond those standards: “Today’s cutting-edge multifamily developments include movie theaters, dog runs, communal gardens and access to co-working space,” says Patrick Sisson, urbanism and architecture writer at Curbed.
If you’re managing existing properties—particularly aging ones—your investment in improvements will give you staying power alongside fancy new units cropping up in cities and across suburbia. So whether you’re an ambitious investor or a seasoned property owner looking to the future, keep these rental trends in mind as 2018 comes to a close. Play your cards right, and next year may offer plenty of opportunity to pad your portfolio, boost revenue, and improve tenant relations to everyone’s benefit.
Everest says: Don’t buy, sell, or wait (!) without us
We look forward to serving you in 2019