Who’s Renting Today?

Recent analyses of the expanding rental housing markets discuss the growing pool of potential tenants for the single-family houses, multiplexes and other kinds of properties available in most areas. But who are these long-term tenants? The recent economic downturn that resulted in the flood of foreclosures, as well as the recent improvements, however slight, in the employment picture, have created new kinds of tenants, And their attitude and commitment to renting may affect the decisions of investors who are following Jason Hartman’s investment strategies and searching for income properties in markets around the country.

The typical profile of a 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 as well. 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 by 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.

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 build a credit history. Potential renters all may have less than perfect credit histories as well, making it more difficult to determine if they can become reliable tenants.

Of course, 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 on the one hand, and the upswing however slight in employment on the other, new groups of renter are emerging, changing the face of the rental landscape and offering a broader pool of potential tenants to choose from. Investors following Jason Hartman’s advice to diversify holdings will likely be able to find the type of renters they want in whatever markets they choose.

The American Monetary Association Team

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