Many believe the only reason people rent multifamily apartments is because of housing affordability, meaning; people only rent because they cannot afford to be home owners. This is simply not true. There are a myriad of reasons why people rent apartments. Following are just a few of those reasons.
Convenience. Apartments homes can provide varying types of convenience; close to work; easy commute to the city center, proximity to parks, etc. People define convenience in many ways. Convenience can be as simple as having the ability to make only a short-term commitment (one year lease versus owning forever). Convenience can be keeping one’s options open to other opportunities by being mobile.
When traveling by myself I have a preference for full service hotels. When traveling with my family I prefer extended stay hotels. Each offers a certain type of “convenience” With full service I can order in and keep working. At extended stay if the kids want popcorn with the late night movie the microwave is right there next to the frig. Each type of property offers certain conveniences depending on my needs. The same argument can apply to renting versus owning.
Location. What’s in an address? Do you live in Laguna Niguel or Anaheim? Queens or in the City? Oakland or Palo Alto? Is one place better than another? It depends on who you ask, right? Regardless of where we call work, many people are willing to commute to live in a place that meets their desired standard of living. Schools come in to play, crime rates, public places, sure. But in the mix is finding a place that makes them feel good about themselves, their accomplishments, where they find themselves in life and comfort.
Lifestyle. Your perception is your reality. And with apartment homes these perceptions create a persona that generates differentiation based on amenities, size, style. In luxury properties it is not uncommon to see fresh flowers in the lobby every day. Do people place fresh flowers in their home each day? Some do but most do not. Yet a lifestyle property provides this amenity as part of your rental experience. We come to expect it and note it’s absence. Lifestyle.
Price. There can be significant differentials between the price of renting versus buying in a certain place. Yet even if the price were equal there are many people that prefer to rent rather than own. Why? Some recognize the costs of ownership is a commitment beyond the initial purchase price. Taxes can increase, things break, neighborhoods change. Thus, price is only one of many reasons why a family may choose to rent rather than own the roof over their head in a particular place.
Financial flexibility. In every price range there are home owners that have a mortgage with a balance higher than the property value. And sometimes prices go down (gasp- really?). So whereas home ownership, historically, was a great inflation hedge and potentially sound financial investment most people are now firmly aware that equity is a gift and not a right (we are using the word gift very loosely).
Look at this short list without your “business brain” for just minute. Notice that three of the five reasons people rent housing rather than buy housing is non-financial. Sure, I could have skewed this to be all about the numbers (rent per square foot, rental vs own, , etc). Consider that individuals and family’s rent for reasons other than just dollars and cents. Consider this more deeply when implementing your leasing and marketing plan.
Please comment on the following questions:
Question: What are some additional reasons why people rent?
Question: What do you think is the single biggest reason people rent versus own?
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Multifamily Insight is dedicated to assisting current and future multifamily property owners, operators and investors in executing specific tasks that allow multifamily assets to operate at their highest level of efficiency. We discuss real world issues in multifamily property management and acquisitions. This blog is intended to be informational only and does not provide legal, financial or accounting advice. Seek professional counsel. http://www.MultifamilyInsight.com