Baby boomers have approached retirement age and are now looking for the ideal place to call home in their leisure years. For a real estate investor, buying an investment property in the best places to retire is a great investment strategy in 2019.
According to Realtor.com, nearly 50 million of the Americans born between 1946 and 1964 have yet to hit the age of 65. Furthermore, the US Census Bureau estimates that all baby boomers will be older than 65 by 2030. This massive generation is reshaping retirement and the real estate market across the US. The most impressive trend among baby boomers is that more and more of them are relocating out of state. Data shows that nearly 1.2 million relocated last year, the highest number on record. The main question is: Where are they moving to? And why should real estate investors buy rental property in these places?
Why Buy Rental Property to Rent Out to Retirees
Let’s start out with the main reasons to invest in the best places to retire in 2019. You might be thinking that you’re limiting yourself by targeting a very niche group of people. However, there are a number of benefits that you should consider.
1) Good Tenants
The first benefit of renting out to retirees is that they make for the ideal type of tenant. We’ve all heard stories of bad tenants – they don’t pay rent on time, they trash rental properties, and increase your costs. With retiree tenants, it’s unlikely you’ll have to deal with these kinds of issues. This is mainly because they are more responsible than younger tenants. This lowers the chances of wear and tear or finding major damages on your investment property.
Moreover, baby boomers tend to have a steady income and savings set aside for retirement. So, buying a rental property in the best places to retire means you don’t have to worry about late rent payment. For a real estate investor, this translates into earning a steady stream of rental income and even positive cash flow from your investment property.
Related: Real Estate Investing 101: How to Find Positive Cash Flow Properties in the US Housing Market
Another benefit of renting out to retirees is that these tenants are less likely to move out. They typically choose a place to live in and stick to it. This allows real estate investors to save on costs and expenses related to vacancy and turnover. If you buy rental property in the best places to retire, you can remove marketing, advertising, screening, and property management costs from your rental expenses – as long as you keep your tenants happy, of course!
2) Location, Location, Location
Every real estate investor knows how important it is to buy investment properties in good locations. There are certain features or characteristics that make for the best places to invest in real estate, and the places that attract retiring baby boomers generally have them. For example, affordability is an important factor that plays a role in whether or not a city is a good real estate market. When you take a look at the list of the best places to retire, you’ll notice that the median property price of homes for sale is pretty affordable.
Click here to start searching for and analyzing the most affordable rental properties for sale in your city and neighborhood of choice across the US housing market.
Also, if you look at the price to rent ratio, you’ll notice that it’s above 18 in all of these cities. The price to rent ratio tells residents whether renting or buying a house is the more affordable option. A ratio of above 16 indicates it makes more financial sense to be a renter than a homebuyer in this city. Consequently, this tells real estate investors that there’s a high demand for rental properties regardless of the affordable home prices.
In addition to that, good quality of life is also a factor to be taken into consideration as it indicates that people actually want to live in this city. This further increases the demand for rental properties. The cities mentioned in this blog post were analyzed based on cost of living, crime rates, walk score, and accessible transportation. These traits make these real estate markets desirable for retiring baby boomers.
Another perk to investing in the best places to buy rental property for retirees is that they’re located in warmer climates like Florida and Arizona. This is a selling point for many property investors as you can check on your investment property and take in the sunshine while you’re at it. On top of that, the best places to retire are typically near an active city or college campus. This means the housing market is active and there is likely quality healthcare as well. The combination of all these features makes these cities great for real estate investing in general, and for renting out to retirees in specific.
Related: Location Location Location: What Makes for the Best Place to Invest in Real Estate?
3) High Rental Demand
You probably haven’t considered buying an investment property in the best places to retire because you assume baby boomers age 65 and older already own their homes. However, a recently released report by ATTOM Data Solutions shows that renting remains more affordable than buying a house in the US. This is mainly because of the increasing prices of homes for sale combined with increasing mortgage interest rates in 2019. Of course, this is affecting baby boomer’s decisions and behaviors.
If you’re interested in reading more about this trend in the housing market, read this Report: It’s More Affordable to Rent than Buy a House in 2019.
According to research by Freddie Mac on the profile of today’s renters, a whopping 81% of baby boomers say that renting is more affordable than owning a house and 42% have expressed no interest in owning a home! These results point to a likely decline in home ownership among retirees as housing prices rise, despite the growing confidence in the economy.
Not to mention that retirees don’t want to spend their later years tied down to mortgage costs. Thus, they choose to downsize and live in rental properties. For real estate investors, this all means that the demand for rental properties among the baby boomer generation is strong – yet another reason to buy rental property in the best places to retire in 2019.
Where Are the Best Places to Retire in 2019?
Realtor.com® has found the US’s fastest-growing retirement destinations and provided information regarding the percentage of residents over 60. Using Mashvisor’s Investment Property Calculator, we’ve analyzed investment opportunities in these cities to give you this list of the 10 best places to buy rental property to rent out to retirees. According to our real estate data and predictive analytics, owning a long-term investment property in these cities will yield a good return on investment.
To learn more about how we help property investors make faster and smarter real estate investment decisions, click here.
#1 Punta Gorda, FL
- Median Property Price: $361,411
- Price/Square Foot: $181
- Monthly Rental Income: $1,665
- Price-to-Rent Ratio: 18
- Percentage of Residents Over 60: 47%
#2 Cape Coral, FL
- Median Property Price: $332,990
- Price/Square Foot: $183
- Monthly Rental Income: $1,330
- Price-to-Rent Ratio: 21
- Percentage of Residents Over 60: 35%
#3 Prescott, AZ
- Median Property Price: $509,548
- Price/Square Foot: $216
- Monthly Rental Income: $1,762
- Price-to-Rent Ratio: 24
- Percentage of Residents Over 60: 40%
#4 Santa Fe, NM
- Median Property Price: $592,140
- Price/Square Foot: $262
- Monthly Rental Income: $2,665
- Price-to-Rent Ratio: 19
- Percentage of Residents Over 60: 30%
#5 Tucson, AZ
- Median Property Price: $273,448
- Price/Square Foot: $146
- Monthly Rental Income: $1,167
- Price-to-Rent Ratio: 20
- Percentage of Residents Over 60: 26%
#6 Morehead City, NC
- Median Property Price: $334,827
- Price/Square Foot: $167
- Monthly Rental Income: $1,175
- Price-to-Rent Ratio: 24
- Percentage of Residents Over 60: 33%
#7 Asheville, NC
- Median Property Price: $404,226
- Price/Square Foot: $264
- Monthly Rental Income: $1,317
- Price-to-Rent Ratio: 26
- Percentage of Residents Over 60: 29%
#8 Barnstable Town, MA
- Median Property Price: $457,316
- Price/Square Foot: $250
- Monthly Rental Income: $1,798
- Price-to-Rent Ratio: 21
- Percentage of Residents Over 60: 39%
#9 Traverse City, MI
- Median Property Price: $398,486
- Price/Square Foot: $244
- Monthly Rental Income: $1,290
- Price-to-Rent Ratio: 26
- Percentage of Residents Over 60: 30%
#10 Ocean City, NJ
- Median Property Price: $580,126
- Price/Square Foot: $444
- Monthly Rental Income: $2,517
- Price-to-Rent Ratio: 19
- Percentage of Residents Over 60: 35%
Want to find houses for sale in any of these cities that make for profitable rental properties? Start out your 14-day free trial with Mashvisor now to start and end your search in a matter of minutes using the best tools like the Property Finder and Investment Property Calculator.