Millennials, or those born between 1982 and 2000, have already outnumbered Baby Boomers. With the former generation increasing in percentage as contrast to other generations, businesses such as the real estate industry are pouring their attention to this generation group. What do they want in purchasing a home?
Bloomberg Business referred to one real estate firm as "hipster real estate developers" that has developed the heart's desires of the millennials. The Timberlane Partners, real estate developers based in Los Angeles and Seattle, had been transforming neglected apartment.
The plan is to buy rundown apartments, renovate, and raise rents for the occupying young professionals. However, the renovation process is a bit more challenging to provide for the whims of the millennial who is about to reside therein.
Location
The location of the apartments is crucial. Millennials are more into promising and walkable neighborhoods than huge parking spaces. This means that a place near cafés, restaurants and boutiques is a good choice.
Timberlane searches for properties with studio and one-bedroom apartments near those aforementioned social places and finds tenants who are willing to sacrifice space for social life.
Shared Facilities
Millennials may love having minimalist flats, but they are into more stuffs than there is in their rooms. An apartment with an in-house gym, entertainment rooms, pools and roof decks looks promising already. According to Bloomberg, Timberlane demolished five apartments to create a 3000 sq. ft. gym with a yoga and climbing wall. A building on the Seattle bike path got a large bicycle storage and repair room.
Raise Rents
After renovating old buildings into minimalist design with shared amenities, Timberlane raises rents to the units by about 15 to 20 percent.
The four-year old company already earned 24% on its first five buildings. The additional seven sites which are owned for at least a year, have been earning around 11%. Timberlane's owners are young and they were living near the trendy Capitol Hill neighborhood. According to Enslow, they and their friends had no interest in a "home out in the suburbs with a white picket fence."
The strategy may seem to be a very bright idea for the current generation age of millennials. But, it may need to be revisited as the generation ages and would want families which cannot be housed in a studio-type or one-bedroom apartment. For the time-being, the idea of living independently in a small space but on a promising neighborhood seems remarkable.
Would you buy a unit from Timberlane if given a chance?
