Priced Out Young Adults Shop for Investment Homes Far Away
September 11, 2019
Millennials who have been priced out of their local housing market are jumping online and searching for investment properties to buy elsewhere, Curbed.com reports.
“We find that millennials see the investment landscape very different than their parents do,” Alan Lewis, co-founder of DiversyFund, a platform where users can invest in multifamily developments online, told Curbed.com. “They’re jaded by the homebuying story, they’ve seen people overpay during the peak and be upside-down in their homes, and they see stock market volatility and don’t have an appetite for it. They want something that offers a departure from the rollercoaster ride.”
But that doesn’t mean they're shunning homeownership. They believe it’s still lucrative to own, but when they live in an area where it’s harder to achieve, they’re finding another way to break into ownership.
Michael Pickens, 31, works in the Bay Area and has found homeownership to be unobtainable so far for his family in the high-priced market. But he and his wife now own six properties in multiple cities, including Pittsburgh and Memphis, Tenn.
“It’s very video game-like, like buying stocks,” Pickens, who used an online platform called Roofstock to buy the investment properties, told Curbed.com. “I’m physically buying these buildings and managing properties from afar.” Roofstock allows users to pick rental properties based on various returns and risk factors, such as location and tenant history. Pickens at first bought a duplex in Memphis for $129,000 and put 20% down on the purchase. He says after the mortgage payment and fees to use a property manager, he earns about $200 a month on the property.
New technologies are making it easier for consumers to pick up investment properties in other locations and manage them. “Smaller cities and rising markets offer the best chances for more consistent monthly returns, and emerging investment platforms offer a channel for capital to flow from the coasts,” Curbed.com reports on the trend. In many markets, the most money is earned through appreciation of the real estate asset and not through the monthly cash flow, Curbed.com reports.
Eleven percent of single-family homes sold last year were purchased by investors—the highest on record, according to data from CoreLogic.
“Millennials, Priced Out of Homes Locally, Shop for Investment Properties Online,” Curbed.com (Sept. 10, 2019)
Updated: September 20, 2019