What Investors Should Know About Renting by Choice

Written by Emily Koelsch

“Renters by Choice” is a relatively new and increasingly widespread phrase. It’s a broad term that refers to anyone who chooses to rent for reasons besides financial necessity. 

Recent data indicates that more people choose to rent for the long term. These tenants no longer see renting as just a stepping stone towards homeownership. 

Renters by choice are ideal tenants for most Landlords. They’re financially stable and want longterm Lease Agreements in class A properties. As a result, real estate investors should pay attention to this trend and consider it when making investment decisions. 

To help you do that, here’s an overview of the movement towards renting by choice and some ways it will impact investors. 

What Does It Mean to Be a Renter by Choice 

A renter by choice is someone who has the financial resources to purchase a home but chooses not to. It’s important to note that people in this category don’t necessarily have the means to purchase a home in the same market where they’re renting. However, they do have the resources to purchase a home and have housing choices. 

There are many reasons people opt to rent rather than purchase a home. Some of the most common are: 

• Flexibility and not being bound to a mortgage
• Not wanting to deal with the headaches and expense of home maintenance 
• Running the numbers and deciding renting is a better financial option 
• Enjoying the amenities and services that come with some rental units 
• Enjoying the community and social aspect of multi-unit buildings 
• The flexibility that comes from being able to “lock it and leave it” 

While many different reasons push people to decide to rent, rising home prices and rising mortgage expenses are at the center of this decision. As the cost of homeownership continues to rise, it’s forcing people of all ages to reexamine their goals and look for alternatives to purchasing a home. 

How Common Is the Trend of Renting by Choice

A 2024 Entrata survey of 2,000 renters showed some noticeable shifts in the mindset of renters. Of the 2,000 tenants surveyed,

• 41% said homeownership is no longer part of their idea of the American dream 
• 20% said they plan to be renters for life 
• 17% said they prefer renting because they’re not bound to a mortgage. 

These results differed from previous years and indicate some clear shifts around the idea of homeownership. When analyzing this data, it’s important to note that all renters surveyed live in large multi-unit buildings in urban areas. It seems clear that renters in high-density, urban areas are changing their views on homeownership and renting. 

Thus far, it’s less clear how much this change impacts renters and buyers in smaller and more rural areas. Time will tell whether this trend extends to all areas of the country or is unique to urban areas. Regardless, there are more renters today than any period since 1965 and nearly one third of renters have housing choices. 

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How This Cultural Shift Impacts Real Estate Investors 

Renters by choice are an excellent group for investors to target when purchasing or upgrading properties. Here are a few things to help your properties attract renters by choice: 

• Properties in desirable mid-sized cities where renting is socially accepted and financially appealing will attract tenants who are renting by choice. 
• Investors can target rent-by-choice baby boomers by offering more space and storage than other rentals on the market. This group wants at least 3 bedrooms, storage space, and parking for two vehicles. 
• Investors can target rent-by-choice millennials by offering amenities and having properties near restaurants and entertainment. 
• Rental properties must be priced competitively to attract renters by choice. Despite the many factors impacting housing decisions, the cost of homeownership is ultimately what is leading people to opt to rent. Overpricing a rental unit will drive away renters by choice. 
• Consider single-family built-for-rent properties. More homebuilders are developing build-for-rent communities, that specifically target people who plan to be lifetime renters. 
• Prioritize good property management and landlord-tenant communication. Tenants who are happy in their property are increasingly choosing to stay for the long term. 

Maximize Your Rental Returns 

While some areas are more impacted by this trend than others, renting by choice is increasingly common across the country. Investors in urban areas and desirable mid-size markets are particularly well-positioned to attract people who want to be longterm renters.

Once you find an investment property, ezLandlordForms can help you get the most out of it. We’re here to support you through every phase of the Landlord lifecycle, including Tenant Screening, Lease creation, and rent collection. 

Create an account today and let us be the property management partner you need. 

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