As the cost of living continues to rise, so, too, do rental rates. Those rates are harder on some than on others. A recent study from RentCafe reveals that millennials pay nearly $100,000 in total rent payments by the time they reach age 30, which is more than any previous generation. While it’s true that millennials earn more today than workers did decades ago, most also have a heavier financial burden than their parents and grandparents did at the same age. A large chunk of that burden is student loan debt. So, when seeking to reposition your multifamily property to attract millennial renters, you will need to keep this and their spending habits in mind.
Guidelines to Follow When Repositioning Your Multifamily Property to Attract Millennial Renters
In addition to spending more on rent and education, millennials have shown a willingness to spend extra on the necessities of their modern lives, including apartments that offer open living spaces that allow them to both work and reside comfortably. This is having a large impact on investment decisions. The desire to make their lives less stressful also fuels their spending on technology, including internet-connected devices, and transit and travel options that allow them to explore their cities and the world more easily, such as Uber and Airbnb. These are just a few advances that not only didn’t factor into the lives of previous generations, but also are now basic requirements.
To successfully appeal to millennials, investors should focus on the millennial needs and desires noted above, and consider the following:
Online Presence. Millennials prefer to research online before making large purchases and important decisions, including financial decisions. If you want to reposition your multifamily property to attract millennial renters, you will need an online presence that’s informative, sleek, and full of great pictures and videos. It’s critical that your website be an accurate reflection of your property to get prospective residents in the door. Posting testimonials and/or favorable reviews can also have a positive impact.
Amenities. In general, millennials love open floor plans and rooftop decks. Convenience is hugely important, so they also require a good internet connection, solid cellular reception, and prefer to make rental payments and schedule maintenance requests online. Additionally, considering smart-home design, including smart thermostats and electronic access through smart keys, when repositioning would give you a leg up on competitors. A primary draw for most millennials—one that could cause them to rent elsewhere if not offered—is a fitness center.
Traditional gyms found in many older Class C and Class B multifamily properties are not necessarily attention-grabbers for the millennial generation. Young people today are much more interested in overall wellness, which includes both physical and mental fitness. So, when repositioning, consider keeping some traditional equipment, such as weights and treadmills, but also dedicate space to yoga and meditation—indoors or outside. Creative investors might partner with a local yoga or fitness instructor to offer daily or weekly classes for residents.
Location: While many millennial renters continue to migrate to metro areas, investors shouldn’t necessarily focus on attracting them only to properties in city centers. Young professionals ages 25-29 are roughly 25 percent more likely to relocate from the city to the suburbs than move from the suburbs to the city, while older millennials are 50 percent more likely to do the same.
As millennials have children, many seek suburban locations that offer a city-like vibe. They want to live in neighborhoods that are vibrant, but that also have good schools, access to public transit, parks, and tree-lined streets. These types of settings—termed “urban burbs”—are not only gaining traction in the suburbs of big coastal cities, but also in inland cities, such as Dallas and Minneapolis, where rental prices are more affordable.
Millennials also prefer environmentally conscious settings in which to raise their families. Some investors who are repositioning their properties are using green or natural materials, such as bamboo, installing only energy-efficient appliances, and using saline water care systems in pools instead of chlorine to speak to millennials’ environmental concerns.
Accommodation: Millennials love their four-legged friends—over 29 million millennial households own a pet of some kind. Many treat their pets as children. The more accommodating you can be to residents with pets, the better chance you’ll have of getting millennial renters to sign leases. Investors, therefore, should consider adding a small, fenced-in dog park or, at the very least, a pet relief area on the property, especially when repositioning in the city. Some luxury apartments even offer pet relief areas on rooftop decks.
Millennials spend more money on rent than any other generation in the past, so multifamily property investors looking to attract them through repositioning must understand and react to their wants and needs.
At CWS Capital Partners, we are a fully-integrated multifamily real estate investment management firm that offers everything from due diligence and risk management to transaction support and property management. We specialize in assisting our clients with 1031 exchanges, acquisitions, repositioning, and development. We own and manage luxury multifamily investment communities in major markets around the country, and we employ a team of experts who can help you hone your investment strategy.
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