Capitalizing on the Biggest Trend in Real Estate
Why Empty Nesters Could Mean a Full Wallet
The other day, while browsing BiggerPockets, I stumbled across an awesome piece by Brian Davis on renting to one of the most overlooked demographics in real estate: retirees.
When picturing an average home renter, most people don’t think of seniors. Seniors, they probably assume, either bought their homes long ago or have since moved into retirement homes. The data, however, suggest otherwise. And with good reason: in many situations, renting a home makes more financial sense than buying.
It just so happens that, as a landlord, renting to retirees makes more financial sense as well.
I won’t get too much into why seniors make better tenants, as Davis already tackled that:
“Retirees also make perfect tenants. Take a moment to ponder how much less wear and tear they inflict on their homes. They’re less likely to have a zoo of pets, almost none of them have rambunctious children living with them, and they don’t have rowdy parties. Then there’s the lower turnover rate. How often do retirees move? Quite rarely — the senior move rate is around 5%. Longer tenancies and lower turnovers mean lower costs and higher returns for landlords.”
Davis also talks about how to renovate your properties to better appeal to seniors by adding safety features, such as grab bars in bathrooms and home security systems, and offering additional services such as a weekly gardener or maid.
I want to take this a step further — if you plan on renting to seniors, not only should you cater to them when marketing the house, but factor this in when purchasing the property in the first place. As people get older, they increasingly look for homes with accessibility. While this generally means single story houses, as Davis mentions, it can also mean more subtle touches, like flat driveways and plenty of space to park.
Yet accessibility doesn’t just apply to the home itself. I first noticed the retiree renting trend while researching the Top 5 Sacramento Neighborhoods to Invest In. Midtown, for some reason, experienced property values rise by a startling 2% more than any other area.
Naturally, I sought to find out why this was. Most of the other neighborhoods on the list, I realized, experienced skyrocketing property values due to new schools or middle class families flocking there. Midtown, on the other hand, saw its property values shoot up for an entirely different reason: empty nesters began moving there. It’s no coincidence that the median age of Sacramento went up at the same time as property values.
Why, though, are retirees drawn to condensed, urban areas like Midtown? We stereotypically think of people retiring to the countryside to live out their years in peace. Nowadays, though, walkability often trumps tranquility in terms of location — people don’t mind a little bustle if it means being a block away from the nearest grocery store.
The trend of retirees renting in urban and metropolitan areas is not exclusive to Sacramento, either. CNN Money recently put together a report on how this trend is manifesting nationwide. Of course, some neighborhoods are experiencing more of a senior exodus than most — make sure you factor this in when you invest in your next property.
The bottom line? When you’re looking for the perfect tenant, take age into account as well. This isn’t to say you should only rent to retirees, but their nest egg combined with low maintenance usually makes them ideal.
Have you rented to retirees? How did it work out? Be sure to let us know in the comments! Don’t forget to follow us on Facebook and Twitter as well!
