The newsLINK Group - The Demand for Short Term Leases
Editorial Library Category: Multi-Family & Property Management Topics: Multifamily Living, Short Leases Title: The Demand for Short Leases Author: newsLINK Staff Synopsis: For many people, a mortgage payment is not one of the things they are currently interested in acquiring. Those who enjoy a mobile lifestyle want to be able to move, and they see a mortgage as something that is more of a burden than it is worth. Editorial: The Demand for Short Leases 4064 South Highland Drive, Millcreek, Utah 84124 │ thenewslinkgroup.com │ (v) 801.676.9722 │ (tf) 855.747.4003 │ (f) 801.742.5803 Editorial Library | © The newsLINK Group LLC 1 For many people, a mortgage payment is not one of the things they are currently interested in acquiring. Those who enjoy a mobile lifestyle want to be able to move, and they see a mortgage as something that is more of a burden than it is worth. According to the U.S. Bureau of Labor Statistics, millennials in particular are three times more likely to change jobs than other generations. Most millennials stay with a single employer for an average of only three years. Doug Culkin is the National Apartment Association’s CEO and president. He has pointed out that for millennials, who are likely to change both job and city on a frequent basis, short- term rentals for terms of a year or less make good sense. Demand for short-term rentals has been increasing for a little while now. According to Jonathan Eppers, CEO and cofounder of a 2013 Los Angeles startup called RadPad, interest in short- term rentals began increasing about 18 months ago. Two- thirds of renters told RadPad they wanted to rent for a year or less. How has increased rental demand affected the rental market? Zillow has some answers: In 2015, there were 43 million households that rented. Their rent cost them $535 million, which was $19 billion more than the $516 billion they spent in 2014. That $535 million is almost as much as the budget for the U.S. Department of Defense, which was allocated $575 billion in 2015. It is also almost four times as much money as people spent on dental care in 2014. Rent went up during the year, but so did the number of households that are in a rental. The increase was approximately 1.8 million households between 2014 and 2015. Renters in single-family homes spent about $245 million. Renters in apartment buildings spent about $239 million. Approximately two thirds of the year’s rental money was spent in the 50 biggest U.S. metro areas: Renters in the New York area spent almost $56 billion. Renters in the Los Angeles area spent almost $35 billion. Renters in the San Francisco area spent almost $17 billion. At the bottom of the list for the 50 biggest U.S. metro areas were the following cities: Renters in the areas in and around New Orleans and Birmingham each spent approximately $1.4 billion. Renters in the Louisville area spent approximately $1.2 billion. Renters in the Salt Lake City area spent approximately $800 million. Increased interest in short-term rentals is changing the rental market. So are companies like Airbnb, which was founded in August, 2008. The headquarters for Airbnb is in San Francisco, California, and it offers short-term rentals in upwards of 34,000 cities and 190 countries. There are more than two million world-wide listings, including more than 1,400 castles. The hospitality school at Pennsylvania State University did a study on Airbnb. It found the following information: Twenty-nine percent of hosts rent their properties more than 360 days each year, which qualifies them to be considered as full-time hosts. More than 39 percent of the revenue generated, which was more than $500 million, was paid to hosts who were operating more than one unit. This applied to revenue generated in 12 U.S. major metro areas over a 13-month period of time. Landlords who are aware of the potential revenue stream from this lucrative market have a choice to make: pursue expensive legal action in order to collect that revenue, or make these tenants partners so they can share in the revenue stream. Since most landlords are not interested in anything as expensive as legal action could potentially be, cooperating with entrepreneurial tenants is often the preferred choice.
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