You’ve probably heard experts say that Millennials make up a large portion of the rental population and approximately a third will rent for their entire lives.
And it’s no secret that millennials spend money differently than previous generations.
So, if you’re an HMO landlord, understanding Millennials could be beneficial for your HMO investment.
But remember, just because Millennials aren’t buying property like the Baby Boomer generation, this doesn’t mean they aren’t fussy about where they rent and what’s included.
The question is… how do Millennials make buying decisions and, what do they really want from a rental?
Who Are the Millennials?
Millennials, also referred to as Generation Y, are one of the first generations to spend their formative years online.
Millennials are defined as people born between 1981 and 1996. Generation X are people born between 1966 and 1980 and Baby Boomers are those born between 1945 and 1965.
What’s interesting to note is that the Millennials are now the largest living generation.
How do Millennials Make Buying Decisions?
Millennials value social responsibility and environmental friendliness when they consider making purchases.
They typically use their own instincts or follow their peers but are wary of financial advice given by parents and financial professionals.
When buying something, they want their purchase to reflect their values of trust, authenticity and choice.
Overall, Millennial spending habits reflect the generation’s priorities:
• Social responsibility
• Environmental friendliness
• Focusing on experience, instead of things
Millennials aren’t often looking to buy a product – they want to buy a lifestyle.
They don’t mind spending more money, if they have it, on brands that align with their values.
Below we’ve identified the spending habits of Millennials and how HMO landlords can use this information to make their HMO investment more attractive.
Millennials have grown up with the internet, and they use it as a trusted source of information, relying on online reviews.
If you want to appeal to Millennials as an HMO landlord, make sure you have a robust online presence. And, more importantly, be on the social media platforms where the Millennials are.
Social Media Worthy
Studies show that 25% of Millennials spend over five hours on their smartphone every day. What’s more, most of that time is on social media sites as they are the biggest consumers of social media.
For an HMO landlord, this means that providing stylish living spaces are highly desirable.
Savvy landlords are creating living spaces that reflect the lifestyle Millennials aspire to rent. “Instagram” and “Pinterest” worthy design trends for modern, co-living rentals include industrial, light or mid-century styles.
Social Responsibility and the Environment
The Millennial shopper wants to know their purchases aren’t upsetting anyone else or the environment. Instead, they want to contribute to a more sustainable way of living.
75% of Millennials consider it essential that brands give back to society instead of just making a profit.
This means, if a property includes furniture and eco-friendly features (energy saving, water saving or natural light), then this will appeal to Millennials.
Food and Dining Out
Millennials are bigger spenders than previous generations when it comes to eating out or buying expensive coffee.
For example, recent surveys show that 60% of Millennials will buy a cup of coffee that costs more than £4, compared to 40% of Generation X or 29% of Baby Boomers.
Eating out in restaurants is another spending habit of Millennials, with 79% saying they do, compared to 66% of Generation X and 56% of Baby Boomers.
What this means for HMO investors, is to find the right property that is walking distance to pubs, restaurants or public transport.
Millennials are more likely than previous generations to spend money on extras, such as taxis, Uber rides, hobbies, electronics and clothing.
Practical HMO landlords will do well to include the right amount of storage in their properties and fast, reliable internet service.
Why HMO’s Appeal to Millennials
Co-living can also make life more complicated for renters, primarily when household bills and essentials are split between all occupants.
HMO’s, on the other hand, allows renters to pay one lump sum every month to cover all utility bills, council tax, internet and rent.
This is appealing to Millennials because they want to pay what they owe as quickly, easily and simply as possible and get on with their lives.
As a landlord, if you can also include extras like a Netflix subscription, cleaning or gardening in the monthly lump sum payment, then this will attract more Millennials.
The Next Steps…
If you are considering buying an HMO or converting an existing property, then here are the next steps to consider.
Firstly, location, location, location. Look for large towns or boroughs with high populations. Ideally, an area that is close to transport, schools, shops, pubs, restaurants.
Next, check if the property can be converted into a compliant HMO.
If you are buying an existing HMO property check that the HMO licence is transferable.
Finally, consider hiring a specialist HMO agent to manage your property and deal with maintenance issues as well as supplying quality tenants for your property.
If you’d like to find out if HMOs are the right investment property for you, then call us on +44 (0) 203 286 6468 or email us at HMO@RekaProperty.co.uk to book a complimentary appointment.
Together we can provide ingenious, innovative solutions that will provide a good investment for you.
P.S. Please share your comments below. Do you own an HMO? Have you considered a buy-to-let investment HMO property? I would love to know your experiences and thoughts on this topic. I hope our paths cross again soon.