This biweekly sponsored column is written by the experts at Gordon James Realty, a local property management firm that specializes in residential real estate, commercial real estate and home owner associations. Please submit any questions in the comments section or via email.
Real Estate is often considered a “high-risk, high-reward” marketplace. However, that conception generally applies to short-term investments that have been made without performing a thorough analysis of the marketplace, startup costs, and, most importantly, industry trends.
So while “house flipping” may have the allure of a quick buck, it also comes with many financial risks. But, looking at recent trends provides an insight into the potential economic gain from adding a rental property to your investment portfolio instead of a short-term investment.
There are many important aspects to consider when evaluating if owning a rental property is the right decision for you. Looking at current demographics in cities, we can see a movement toward urbanization for retirement. This stands in sharp contrast with the retirement plans of older generations who mass-migrated out of the city post retirement. The urban lifestyle provides an ease of living that many baby boomers are not willing to give up in order to pursue the retirement dream of a relaxing life outside the city.
In cities like Washington D.C., there are things constantly drawing people to the city, from jobs to personal interests. Therefore, on top of baby boomers choosing to maintain their urban lifestyle, there is also an influx of young people to capitalize on as well. This creates a large market for rental properties in urban areas to satisfy this growing customer base.
Millennials are the most educated generation, making them more likely to have a well-paid, highly skilled job in an urban center as opposed to the low paying manufacturing jobs of the past. This allows Millennials to have more spending power for rental properties in the city.
The trends of Millennials are also affected by long term student debt, in addition to the after effects of the recession on their families. This, in turn, impacts important life decisions, including marriage and buying property. As more people are choosing to wait to commit, there is a large demand for rental properties in highly populated cities as people capitalize on the flexibility of renting.
If you are considering pursuing the opportunity of investing in a rental property, this could be the right time to start looking. With a growing rental market to serve, there are plenty of potential renters coming to the city in search of the flexibility your property could provide.
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The views and opinions expressed in the column are those of the author and do not necessarily reflect the views of ARLnow.com.