The Role of Rehabbers is Just Getting Started

Boomers will be selling with Millennials buying…

While there are a number of useful inputs to the value of a certain property,  an interesting phenomena of use to rehabbers is the nature of buyers and sellers.

One useful input comes from the field of economics in the form of what is called a population pyramid, this one from the Census Bureau. Generally, it usually looks more like a triangle with a large amount of young people representing the base, and then fewer people surviving into later years.

It’s also pretty common to have males and females separated out, as it is in this case.

But according to the chart, we don’t have a regular triangle. In fact, we have 2 lumps.

The top lump represents the Baby Boomers, just starting their retirement years. As they age a bit more, they are likely becoming sellers of the homes they are currently living in, as they downsize for whatever reason.

The other lump represents the Millennials. And yes, they are buying houses! Realtor.com points out that more than 50% of mortgage originations are now coming from Millennials, while Boomers are now less than 15% of the mortgage originations.

This age difference between buyers and sellers is also reflected in the average age of US housing stock, which now sits at older than 34 years.

So, we have buyers and sellers, what is the role of the rehabber?

As we consider the specifics of a property, it becomes very obvious.

First off: this means that the houses are out of date in terms of style. Some of this will go away in the form of furniture that is removed before closing. But permanent elements such as iron railings, chalk walls, dark cabinets, ceiling fans in every room, textured ceilings, pine, tile counters, dark rooms, etc.  that were once in style, are no more.

As a rehabber, you will end up with much of this in your dumpster at the end of demo day.

These homes are also out of date in the ways that the home is used. Outdated and worn out items such as water heaters, HVAC, roofs, plumbing, and security can make the home significantly less comfortable and also add to the cost of ownership.

However, what doesn’t change about the homes is their location.

While new homes are being built in outlying areas, older homes remain nearer to work, shopping, and developed entertainment centers.

Many buyers are finding that the commutes are just too long to buy in an outlying area, and with the difference between a new build and a rehabbed home getting smaller & smaller, buying a ‘new’ older home in a closer area just makes sense.

The younger demographics, like Millennials, provide an essential need for rehabbers to update & upgrade those homes that are old & outdated, yet located in desirable areas.

Ready for your next project?

Boomerang Capital Partners has helped rehabbers flip thousands of homes with hundreds of millions of dollars of funding across the country.

We’ve been there so we understand what you need to get the work done and accomplish your goals.

When you’re ready for non-traditional financing solutions for your next fix and flip project, be sure to contact us for your free quote.