by Dan Rafter
Patrick Bet-David is a renter by choice. And he thinks others should follow his lead.
Bet-David is the chief executive officer of The PHP Agency, a financial services marketing firm based in Oxnard, Calif. He also rents his home, and is surprised that more don’t do the same.
“A home is one of the greatest expenses known to mankind,” Bet-David said in a phone interview with Midwest Real Estate News. “So many people buy into the myth that you have to buy a home right away. That’s a risky financial move. So many people today are struggling to not miss their next mortgage payment.”
While not as many people as Bet-David would expect do rent by choice, it appears that many more are taking this path, at least judging by the multi-family activity across the Midwest.
In Golden Valley, Minn., — a suburb of Minneapolis — Trammell Crow Company recently broke ground on Arcata, a six-story, 260,000-square-foot multi-family building that will include 165 Class-A luxury residentail units when it opens in the fall of 2014.
In Kansas City, Kansas City Sustainable Development Partners has offered $7.1 million to purchase the Commerce Tower. The company plans to turn the 30-story office tower in the heart of downtown Kansas City into a multi-family development.
And in Clive, Iowa, Hubbell Realty Company and Stonegate Capital Partners have recently begun construction on Stonegate Crossing, a $19.7 million 198-unit multi-family community.
Bet-David encourages young people to seek out such rentals — or any rentals, really — instead of buying a home. It’s not that Bet-David considers owning a bad thing. He just thinks it makes more sense for buyers to purchase homes only after they have enough cash built up to comfortably affordone.
His advice? Don’t purchase a home until you have at least 12 months of mortgage payments saved up.
“More young people are putting off buying a home,” Bet-David said. “The cost of college has become ridiculous and they are graduating with so much debt. It’s better for them to rent until they can get themselves financially secure.”
Bet-David isn’t the only one who feels this way, of course. Monica Makin, vice president of acquisitions and asset management with Chicago’s Urban Innovations, told Midwest Real Estate News that renting has become an increasingly popular choice among buyers who want to live in urban areas in which they can walk to restaurants, shops, entertainment and public transportation. And she said that it’s not just young buyers who want this; older buyers, many of them empty-nesters, are choosing urban multi-family living, too.
Even Chicago real estate legend Sam Zell, during the 10th Annual Commercial Real Estate Forecast Conference held by Illinois Real Estate Journal last year, said that traditional homeownership is seen as a losing financial proposition by a growing number of young professionals and recent college graduates.
How long will this trend continue? That’s not an easy question to answer. All indications, though — including the actions of developers across the Midwest building new multi-family housing — are that renting will remain a more popular option for consumers of all ages for years to come.