Misconceptions abound, even around homeownership. Millennials (who are no strangers to being incorrectly labeled) and Gen Z are throwing a plot twist into the real estate market. How? A recent report says that there’s a portion of buyers from these generations who are pursuing homeownership as a way to build their wealth, though they aren’t actually the ones living in the home they purchase. Not really a totally new concept, right? Here’s the twist: these are first time home buyers.
Whoa. Are you questioning if you read that right? You sure did!
Instead of buying their first home and moving into it themselves, some buyers are purchasing a home so they can use it as a rental. This tactic may be gaining popularity, at least in part, because of the affordability challenges brought about by today’s higher mortgage rates. In comparison to older generations, where becoming a first-time homebuyer was about finding a long-term space for yourself, 43% of Millennials and Gen Z are considering a home as an investment property. Only 9% of Baby Boomers and 27% of Gen X went this route.
Why Younger Buyers Are Buying a Home To Use as a Rental
The big question I know you are asking is why? It’s totally about less hassle and convenience. Think about it. Purchasing for investment, allows buyers to continue living in their current location, like the bustle of a city apartment or a neighborhood that they know and love, where they couldn’t afford to buy. Instead of giving up on the idea of owning a home, they buy a home in a more affordable area with the intention of renting it out.
In a way, they’re getting the best of both worlds. They live where they want, and they still own a home where they can afford it.
The ultimate goal here is to generate passive income and diversify assets. It works like this: in addition to having a rental stream of income, the equity they build in their house will also help grow their net worth over time.
If you’re thinking about buying a home as an investment strategy to build your wealth, let’s connect to explore your options and nearby areas that may have homes that fit what you’re looking for.