Most millennials like us dream of being chic living in a big city.
Picture it: You’ve graduated college and have a decent paying job in a cool city. Think: Boston, San Francisco or Austin, TX. You spend your evenings having drinks with friends and weekends out partying. You’re living the life….right?
It’s no secret that many Americans are faced with unprecedented amounts of debt. From student loan to credit card overages, the average American household has more than $132,000 in debt! Credit cards alone account for more than $15,000 of that number.
It really begs the question. Can you really afford to live the high life?
Living in the boring burbs of the Midwest
The boring Idaho potato farmers could be more financially clever than we thought.
Housing accounts for approximately 30% of the average person’s income, but in major markets this number easily creeps closer to 50%.
With a tight housing supply and affordability at record lows, where are young would-be homeowners supposed to go?
Hello Mid West!
CNBC recognizes that as millennials reach the big 3-0 and want to move into urban homes, traditionally inexpensive markets may see a price increase. The article mentions Cleveland specifically, but the same can be thought of about other Midwestern cities.
As you know, we live in Columbus Ohio. Not exactly a happening spot if judged against top-of-mind-cities like Chicago and Los Angeles, but it does have a lot to offer.
Columbus has been building new apartments and infill housing at breaking speeds. It is also actively attracting millennials by investing in public transit and revitalizing the urban core.
So what does this mean for real estate investors?
It’s time to buy! Here’s why:
Tiny houses have not caught on yet
HGTV says that everyone wants a tiny house. Ask any lady about the size of her shoe collection and you may be sorely mistaken. While there is a certain segment of the population that isn’t willing to live on the small side, even people with modest household value room to roam.
We are not talking McMansions here. The bread and butter 3 bedroom, 2 bath, 1500 sqft home with a one car garage is popular because it makes sense!
People want space and space is inexpensive to offer in the Midwest.
Millennials are still cool
As millennials age, we will start to give up their luxury downtown apartments in favor of single family homes. The high standards for granite countertops may go by the wayside, but the need to be near the action is here to stay.
So what does that mean?
It means that our future tenants will value proximity to amenities. They will want easy access to the urban core – even if they don’t know it yet.
Urban homes in many cities across the Midwest (and the country for that matter) are in the bad part of town today.
The millennial generation is larger than Baby Boomers. There’s a crap ton of us. We all need a place to live. We as real estate investors may as well provide this much-needed service to our generation mates.
These are still the glory days
Prices have increased from post-2008 lows, but with interest rates still near zero, we will surely look back at this time with nostalgia.
An ad we saw today advertising practically free money.
The reality is that now is still an excellent time to buy – especially if you choose to use leverage. With rates at all time lows, you can lock in amazing rates for 3 decades.
We have been considering getting a few more properties on owner financing, then refinancing them into a blanket note with a low rate.
Why You Should Buy Rental Property in the Midwest
All in all the Midwestern real estate market is attractive because of its low price point. The unreasonable price appreciation in coastal cities has caused many to be priced out of the market.
As investors, our job is to capitalize upon market trends before they become trends. Investing in the Midwest, if you have not done so already, may be an excellent way to purchase inexpensive, quality housing.
Let us know your thoughts! If you don’t live in the midwest already, are you considering it? Would you invest in the midwest even if you choose to stay in a more expensive market?