At the start of 2017, single family rentals had next to no traction. Commercial real estate investors were focusing on multifamily rentals as well as fix and flip projects instead. However, in 2018, millennials are showing a positive trend in leasing single family rentals, which is giving commercial real estate investors a renewed source of revenue for their portfolios.

Why Single Family Rentals Declined

After the market crash a decade ago, single family rentals went into decline. At first, no one saw much sense in leasing homes without gaining any equity, and people had tightened their budgets. As the economy improved, more people were upgrading from apartment units to houses, and saw no reason to continue renting when they could purchase. This led to the big boom in the fix and flip market, as buyers were looking to settle down and get something more permanent to add equity to their personal investments. While selling homes will always have a large place in the commercial real estate market, single family rentals are making a comeback.

Single Family Rentals And Millennial Spending

Millennials are now causing an increase in the single family rental market. In part, a lot of the reasoning behind this is rooted in impermanence. Millennials were in or leaving college when the economy crashed a decade ago. This, along with the increasing emphasis on temporary or disposable consumerism, put an emphasis on renting over purchasing. It makes no sense to purchase a house when renting one means maintenance and upgrades are the responsibility of the property owner, not the renter. The overall benefits of single family rental seem like a financially sound path to millennials, who are more likely to have careers that require relocation every couple of years. This contrasts greatly with homeowners who are looking to settle down and work locally. Single family rentals provide all of the space and amenities millennials demand, along with the freedom to relocate if necessary. Additionally, millennials are earning more on average compared to previous generations, in part because of the lessons learned from the last economic crash.

Financing For Single Family Rentals

At Speritas Capital Partners, we provide a wide range of financing solutions for commercial real estate investors. If you are looking to purchase a property and turn it into a single family rental, or convert an existing structure into a rental home, our team can help. Contact our offices today to learn more.

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