Should you target the cities millennials favor?
A number of the above cities -- specifically, San Francisco, Oakland, and San Jose -- are tech hubs known for their extremely inflated property values, so you may want to proceed with caution when targeting some of the above hotspots. That said, you'll find more moderately priced investments in cities like Houston, where the median home value is $196,902, or Charlotte, with a median home value of $260,711.
Where to buy in millennial-heavy cities
It's one thing to decide to buy a rental property in a city that tends to be favored by millennials. But how do you narrow down your choices?
While investing in a home in a good school district is a solid tactic for attracting families or older renters, if you're targeting millennials, think proximity to amenities like parks, restaurants, cafes, bars, and public transportation. In fact, many millennials would rather live in a hip, up-and-coming neighborhood than five minutes away from work, so rather than focus on industrial areas loaded with office buildings, especially as we're in a global pandemic that has led many to work from home, you may instead want to focus on neighborhoods with character.
When it comes to square footage, many millennials fly solo and don't necessarily need the largest living space out there. But you may want to avoid adding a studio apartment to your real estate portfolio and instead opt for a one-bedroom apartment or larger. That better lends to couples living together, at the very least.
Should you look outside millennial-heavy cities?
Of course, some investors are of the mindset that it's better to focus on older renters -- those who may be more financially stable, with the means to cover higher rent costs. But remember, many older tenants rent homes rather than own due to financial constraints. Millennials, meanwhile, are more likely to actually want to rent, and do so for years, so they're a good audience to focus on. And knowing what cities they're flocking to could help you buy in just the right locations.
Of course, this doesn't mean you have to focus your search for an income property in the cities above. If they're out of reach financially for you, look to adjacent cities. That's what millennials themselves are often forced to do, and that's how lesser-known cities grow to explode over time.
Just think about New York City. Years back, younger renters started moving to Brooklyn when Manhattan got too expensive. Nowadays, you'll pay a serious premium to rent in Brooklyn, to the point where many neighborhoods there cost more than an apartment in Manhattan. As such, don't hesitate to search outside of the hottest cities for millennials, because you could end up snagging a property that not only appreciates substantially in value but manages to command decent rent initially and a lot more rent in the future.