What the Exploding Rental Market Means for Real Estate Agents
Note: this article was originally published on the blog for RentSpree, a participating CRMLS Marketplace product. It has been republished with permission. CRMLS has not received and will not receive compensation for this post.
Real estate agents commonly stay away from rentals because of the tedious tenant verification process and the inconvenience of collecting lease applications. Even though agents are steering clear of rentals, millennials are flocking towards them.
With increasing property value and student loan debt, the supposed new generation of homebuyers aren’t buying homes, but rather renting instead. It is important for real estate agents to see this new trend and take advantage of it.
Luckily, there are many services that are being developed to help alleviate issues that agents have with rental properties, for instance tenant verification or the lengthy lease application process.
With these new developments, real estate agents can embrace the renting trend and not have to stress about all the headaches that lease properties may bring.
The Rental Market – Why Is It Growing?
According to CNBC, home ownership of people under the age of 35 has decreased by 21.2% since 2004. With home ownership on the decline, rentals have increased by 13% according to a Pew research study in millennials ages 25-35 compared to the early boomers respectively.
The rapid growth of the rental market, especially among millennials, has been widely covered. While many believe the happy-go-lucky attitude of millennials is what is preventing them from committing to buying a house, other factors like skyrocketing home prices and crippling student debt play huge roles in the increasing rental market. Here are some factors that contribute to the increase of rentals:
According to Make Lemonade, the student loan debt in the US has risen to over $1.4 trillion, with the average student loan debt from the class of 2016 being $37,182. With this kind of debt, it’s hard to even think about buying a house, much less actually do it.
Ironically, student loan debt is the second highest consumer debt right under mortgage debt, per Forbes. People don’t want to and can’t afford to take on these two loans at the same time.
Buying a house takes a lot of commitment. It’s not something people can just walk away from. It takes a lot of time and effort to find the perfect house, and when you finally do it can take several months before you actually get the keys to move in.
In comparison, renting is easy. Once someone finds the place they want to live in, they can be moving in the next day.
Renting also allows for mobility. With the average person having 12 different jobs in their lifetime, according to Bureau of Labor Statistics, it’s hard to know where they are going to end up. Renting allows people the ability to apply for a job across the country and be ready to move in a second.
Millennials love to travel — so much so that about half who were surveyed by Realty Mogul said they would rather travel the world than own a home. They are a generation that would rather experience things than own things. This might change through time, but as of now it is clear that renting is right for them.
How Real Estate Agents Can Benefit
With increase in the rental market, it is important for real estate agents to see the value in rental properties. However, old habits are hard to break. Many real estate agents will avoid rentals due to the loads of paperwork, time-consuming application process, and low commission that doesn’t warrant the time spent on each rental.
But most of all, the liability faced when handling a rental property is perhaps the biggest drawback. Agents routinely handle sensitive information when working with rentals, for example, a social security number needed for tenant verification purposes.
All of these are legitimate quips against rental properties, but thankfully there are now services that alleviate these issues. You can find online rental application and tenant verification services that provide instant screening and fast application turnaround. Some of these services are free, and they don’t require you to handle sensitive information like a social security number.
The Bottom Line
With eliminating the liability and the pain of dealing with paperwork there’s no reason real estate agents should avoid rentals. In fact, with the growing rental market, agents should take full advantage of this opportunity. The rental market is only going to get bigger and more profitable.
Written by Ramsey Abushahla. For more information, visit http://crmls.rentspree.com.