A lot of people have outdated assumptions about who rents their homes. In this day and age, renting isn’t something people necessarily do out of necessity. While that may be the case, more and more people are choosing to rent.
Now, experienced real estate investors understand two essential things: resident retention is critical to success, and retaining residents begins with knowing who they are and what they want. We want you to toss away any preconceived notions about renters. It’s time to break down a few types of SFR households.
But why do renter demographics matter?
As a passive real estate investor, you may be arguably disconnected from the people you rent to. This is natural. You’re not supposed to be in the weeds. However, knowing who your residents are, at least in a demographic sense, helps accomplish a few critical things:
- Buying properties that won’t stay vacant for long sheerly because they appeal to the right people.
- Being an attractive long-term housing option, reducing turnover and maximizing cash flow.
- Aligning your property with local market demand and setting competitive prices.
- Tailoring the property to meet resident needs increases the likelihood of lease renewals.
- Helping you determine the long-term market viability of a property based on demographic shifts.
Further Reading: 5 Ways SFR Residents Factor Into Your Success
So, who’s renting SFRs?
We won’t say these categories encapsulate every type of SFR renter, but they are the most common. The most common demographic for your specific rental will depend on various factors, especially market growth, nearby amenities, and neighborhood. This is why knowing your market and working with intimately knowledgeable property managers is key.
Demographic #1 – Young Families
Age Group: Late 20s to early 40s.
Why They Rent: They’re often after more space for growing families and prefer suburban areas with good schools. Renting may be a matter of convenience or necessity, but SFRs offer more space and privacy when considering family planning.
Where They Go: They prioritize markets with high quality-of-life ratings. Markets with plenty of child-friendly amenities – parks, playgrounds, libraries, museums, etc. – are a big draw. They will also value job opportunities to support a comfortable, stable lifestyle.
Income Level: Middle-income earners who may not yet afford homeownership.
Lifestyle Needs: Young families require outdoor spaces, proximity to (quality) schools, and family-friendly communities. They value easy-to-maintain properties that don’t disrupt their busy lifestyles with work and parenting responsibilities. Ample storage solutions are a big draw. They tend to want to put down roots and keep moving to a minimum.
Demographic #2 – Empty Nesters or Retirees
Age Group: 55+.
Why They Rent: Often, empty nesters and retirees move to rentals from owned homes to reduce responsibilities or because they prefer flexibility. It’s either a case of shifting needs and priorities (for example, wanting to travel more) or due to the waning physical ability to maintain a home on their own.
Where They Go: Empty nesters and retirees can choose to settle just about anywhere, but they tend to migrate towards warmer markets that may offer novel or retirement-friendly, adult-oriented amenities, such as country clubs or golf courses, fine dining, and shopping.
Income Level: Moderate to high fixed income from retirement savings or pensions.
Lifestyle Needs: This demographic favors quiet neighborhoods, low-maintenance living, and access to healthcare facilities. Single-story properties are often the better choice. Entertaining space is still valuable. Small, easy-to-manage yards are key.
Reason #3: The earlier you invest, the more wealth you build.
Age Group: 30s to 50s.
Why They Rent: They prefer suburban living or are relocating for jobs but aren’t quite ready to commit to buying. These professionals may be single or married and may or may not have children, but they choose their rental for career-minded reasons.
Where They Go: Their ideal cities have strong, diverse, growing job markets. They’re after opportunities to expand their career and income. They might consider how friendly the market is for small businesses and start-ups.
Income Level: Middle to upper-middle-income brackets.
Lifestyle Needs: Middle-class professionals want safe neighborhoods, proximity to work (or an easy commute), and amenities like garages and outdoor spaces. They may value home offices and other flex spaces to accommodate both work and hobbies.
Demographic #4 – Multi-Generational Families
Age Group: Mixed (includes extended family members).
Why They Rent: For multi-generational families, apartments rarely offer the square footage necessary to comfortably house everyone. Larger detached rentals provide the space and privacy needed but are more affordable and attainable than buying.
Where They Go: Multi-generational families can be just about anywhere and anyone. However, ethnically diverse areas are more likely to see these families, as Black, Hispanic, and Asian families are most likely to embrace multi-generational living.
Income Level: Varies, often pooling resources across multiple earners.
Lifestyle Needs: Multi-generational families need ample bedrooms, separate living spaces, and multi-bathroom (especially ensuite) homes. Storage space, sizeable kitchens, flex space, and outdoor areas are also a draw.
Knowing who makes up your market’s rental demand will allow you to best address lifestyle needs and priorities…ultimately providing the quality property people want and the passive income you need!
Invest with the ones who have turnkey real estate down to a fine art – REI Nation!
