Demographic Changes Lead to Rental Opportunities; Finding the Right Finance Partner Key to Success

Apr 25, 2017

By Bruce McNeilage, Kinloch Partners

When soldiers returned home after WWII, they took advantage of the G.I. Bill. They purchased small houses in the suburbs with low interest rates and little or no down payment. They  found jobs and often worked for the same company for 40 years, retiring with a pension and a gold watch.

Today, that version of the American Dream is quickly becoming a relic.
Homeownership is on the decline. According to the U.S. Census Bureau, homeownership reached 69.2 percent of households in 2004, but fell to 63.7 percent in the fourth quarter of 2016.
There are many causes to the drop in homeownership.

  • The costs of materials and land to build single-family houses are rising.
  • At the same time, real median income has dropped by nearly $2,000 from 1999 to 2015. What used to cost a family 25 percent to 30 percent of their income today costs 40 percent to 50 percent of their income.
  • People are waiting longer to get married and put down roots. In 2016, the average male was 29 and the average female 27 when they got married. In 1950, this was 22 and 20.
  • People change jobs much more frequently. Millenials are projected to change jobs on average four times by age 32.

A new version of the American Dream is emerging. It’s based more on flexibility – the ability to travel to new destinations and enjoy new experiences – and fulfillment – having a career that provides a high level of satisfaction.

In the new version of the American Dream, houses are important, but not nearly as big a status symbol as they were 20 or 40 years ago. A house is still something to which younger consumers aspire, but it’s something they might put off for another 10 years or more.

While the American Dream might have shifted, there is a need for the entire concept of homeownership to change, too. Most young people will be in the rental market in the coming years. Down payments are difficult to scrape together, entry-level real estate inventory is often tight and even non-existent in some markets.

The rental-to-ownership concept needs to grow. Developers need to build more high-quality, low-cost properties and initially rent them out. Over time, they need to work with their renters to create an opportunity for a purchase. This concept will resonate with younger buyers, who might fall in love with a house, but not quite be ready to commit to a 30-year mortgage. The concept is great for builders and real estate investors as well, as it provides a way to generate short-term cash flow, long-term equity and ultimately a profitable sale.

 

Mortgage rates likely to hit 8% in a few months: Expert

By Bruce McNeilage • 19 Apr, 2024
This is a subtitle for your new post

Rent pushes CPI Higher in November

By Bruce McNeilage • 14 Dec, 2023
In my interview with Seana Smith & Brad Smith from Yahoo Finance today we discussed single-familiy rental rates and my thoughts on mortgage rates going into 2024.

2024 home prices, mortgage rates could be 'a wash': Expert

By Bruce McNeilage • 14 Dec, 2023
Owner's equivalent rental prices rose 0.5% in November , a pervasive factor in US inflation as limited housing inventory continues to squeeze homebuyers out of tightened real estate markets. Kinloch Partners CEO Bruce McNeilage joins Yahoo Finance Live to weigh in on the outlook for renters and home purchases in 2024. Home prices are "not going to go down, that's for sure. And mortgage rates might go down, but if the cost of a house goes up $10-20,000, it's a wash," McNeilage states. For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live. 

“The build-to-rent market is probably the fastest-growing segment in the housing business and also in all of real estate,” Kinloch Partners co-Founder @BruceMcNeilage says. “We are doing really well

By Bruce McNeilage • 04 Dec, 2023
https://twitter.com/YahooFinance/status/1730704964685603271New Paragraph

Rent or buy in Nashville? This couple's real estate solution is catching on

By Bruce McNeilage • 08 Nov, 2023
Original Story can be found here: https://www.tennessean.com/story/money/real-estate/2023/11/08/renters-seek-new-options-in-nashvilles-tight-housing-market/70652968007/ Charlene and Timothy Stratton traded in their 4-acre Illinois ranch for a rental home in the Nashville suburb of Spring Hill and, so far, they love the new low-maintenance lifestyle. Like a growing contingent of Americans, they chose to rent a single-family house rather than buy a home or rent in multifamily apartment buildings. "We lived in the country all of our lives with horses and cows," said Timothy Stratton, a retired airline mechanic. "But we wanted to rent because we’re looking at our age. We did a lot of research and decided this will work out for the time being." Families like the Strattons increasingly want the mobility and limited commitment of a rental, with the privacy and space of a single-family home. Meanwhile, many families are also being pushed out of the tight housing market. Housing affordability plummeted to historic lows this year, with only 23% of U.S. listings in April considered affordable to households earning $75,000 or less, according to the National Association of Realtors. In response, real estate investors are betting heavily on new rental properties and, increasingly, on standalone units — especially in the South. More than 61,000 fully and semi-detached single-family rental units are under construction in Southern states as of September. In comparison, 28,000 units are in production in the Western U.S., the next-busiest region, according to RealPage Market Analytics. Those units include single-family homes, townhomes, rowhomes, quadruplexes and duplexes. Single-family rental communities are increasingly concentrated in subdivisions with on-site maintenance, rather than in homes nestled in for-sale housing neighborhoods. The Nashville market has the ninth-highest number of in-construction, build-to-rent homes with 2,745 units in the pipeline. Phoenix tops the list with 21,676 units underway, a RealPage analysis in August found. "Construction isn't going fast enough in Nashville. If they built four or five new build-to-rent communities, they would fill them up immediately," said Doug Ressler, the business intelligence director of Yardi Matrix, a real estate data firm. "We really expect Nashville to continue to see growth here." Rent vs. own: 'More house for your money' Charlene Stratton filled the three-bedroom house with festive seasonal crafts and artwork she creates in her home studio. Renting isn't perfect, but there are real perks — like, when the air conditioner stalled on a Saturday afternoon in the middle of summer, the landlord offered to put them in a hotel until maintenance could fix it that Monday. "When something goes wrong, we just call them," Charlene Stratton said. "It's great." The Strattons live at DerryBerry Estates, one of the first of its kind, built in 2019 by Kinloch Parners. The 34-home community sits on former pastures with views of Spring Hill's rolling green landscape and rose bushes in the front yard. Local development companies like Kinloch Partners of Nashville and Franklin-based Chartwell Residential and Barlow Builders have made stakes in the industry. "In 2008, I had no competition. Now there are six or seven players in the market," said Kinloch Partners Co-founder Bruce McNeilage, who sold much of his inventory to American Homes 4 Rent and expanded to South Carolina. "We're 99% leased out." McNeilage said he prioritizes creating a calm, supportive community with competitive prices. Rents at DerryBerry Estates ranged from $2,300 to $2,600 for homes with three to five bedrooms in September. "People are starting families later in life and COVID-19 has allowed people to work out of their houses so people are moving farther out," McNeilage added. "Housing prices are going up and interest prices just doubled. You can get more house for your money if you get farther out." Housing in Nashville area: 'Can't build them fast enough' Chartwell Residential, a local real estate firm specializing in multifamily apartments, is now building out its first single-family rental home community. https://www.tennessean.com/story/money/real-estate/2023/11/08/renters-seek-new-options-in-nashvilles-tight-housing-market/70652968007/ https://www.tennessean.com/story/money/real-estate/2023/11/08/renters-seek-new-options-in-nashvilles-tight-housing-market/70652968007/ https://www.tennessean.com/story/money/real-estate/2023/11/08/renters-seek-new-options-in-nashvilles-tight-housing-market/70652968007/ https://www.tennessean.com/story/money/real-estate/2023/11/08/renters-seek-new-options-in-nashvilles-tight-housing-market/70652968007/ https://www.tennessean.com/story/money/real-estate/2023/11/08/renters-seek-new-options-in-nashvilles-tight-housing-market/70652968007/ https://www.tennessean.com/story/money/real-estate/2023/11/08/renters-seek-new-options-in-nashvilles-tight-housing-market/70652968007/
Show More
Share by: