Millennials grew up watching reality based TV shows on how to fix and flip real estate. Buying, fixing and selling residential real estate as an investment strategy was one sector of the real estate market that retained a connection to the basic concept of creating and realizing value during the bubble years. The collapse of that bubble in 2008 taught Millennials a thing or two. The millennial real estate investors are applying those lessons.
Enter The “Flipster”
An entire sub-group of Millennials called the Hipster embraces an urban, counter-cultural, intellectual ethos. They may be stereotyped as members of the grunge movement who took a shower and got a college degree. Real estate investors in this group focus on buying existing properties and remodeling them to fit the design sensibility of other Hipsters.
Hipsters are urban but shun car ownership. This means they prefer to live in areas that are convenient for public transportation or bicycles. They are counter-cultural but are starting to buy residential real estate. This means that the properties that catch their eye will have distinctive features. Millennial real estate investors cater to this market.
These millennial real estate investors operate in close urban areas. Forbes Magazine identified 30 zip codes that are prime territory for Flipsters, and they are all either urban or served by commuter rail lines. One unique feature Flipsters add to properties is to change the fence boards to run horizontally instead of vertically. This is a badge of honor to the counter-cultural millennial real estate investor.
Millennial Real Estate Investors Think Outside The Box
Remodeling homes to appeal to a very unique aesthetic is unconventional and shows that Flipsters learned from the reality TV shows. The basic formula of those shows was to add value to run down or neglected properties by restoring them to prime market condition. These millennial real estate investors have internalized this strategy by creating value for their target market.
Like all Millennials, they use technology to achieve their goals. Flipsters check the styles that are trending on Pinterest to be sure they are up-to-date on the latest looks. They arrange financing through hard money internet lenders, rather than brick-and-mortar banks.
In fact, the entire fix and flip strategy in residential real estate is unconventional. It is a variation of the traditional first-time buyer approach of buying and living in a “fixer-upper” in order to build equity. Although popularized by the TV genre, it is still outside the mainstream of residential real estate and real estate investing.
Millennials Overtake Baby Boomers
According to the US Census Bureau, Millennials have overtaken Baby Boomers as the largest demographic group in America. This means that economic change in the economy will now be driven by this group rather than the older generation. This trend will be accelerated as Baby Boomers continue to retire and become more ossified in their consumer habits.
The unique approach to real estate characterized by the Flipster will continue to influence the real estate market long after the finite supply of urban areas has been remodeled to fit Hipster sensitivities. Online real estate investing platforms are well poised to benefit from this shift in market forces.