Royal Oak’s Rental Boom: How Landlords Can Capitalize
As Royal Oak anticipates a surge in its renter population, landlords are presented with a unique opportunity to capitalize on the evolving housing market here.
This southern Oakland County city, known for its vibrant downtown and residential neighborhoods, is already pretty popular with Detroit residents.
But now, it’s set to witness a significant increase in rental demand, driven by a robust residential development scheme as part of the city’s master planning process.
The Changing Dynamics: Owned vs Rented Houses
Royal Oak’s housing market is poised for a shift, with projections indicating a substantial rise in renters compared to homeowners.
Currently, the rate of homeownership versus rented properties is already slightly skewed. And with the anticipated influx of more than 2,800 renter households by 2025, compared to just 385 expected new homeowner households, this balance could tip even further.
Such a shift can have profound implications on neighborhood dynamics, as areas with fewer owner-occupied homes often face challenges in maintenance and community engagement.
This scenario also presents a challenge to landlords, as they may need to invest more in property upkeep to maintain the allure which a well-kept neighborhood like Royal Oak has in the first place.
Multifamily Developments: Meeting the Demand
The anticipated increase in renters is largely driven by the construction of multifamily dwellings, which are set to accommodate 60% of the new renter households.
Recent projects, such as The Griffin, The Roy, and Billings Place, have already added nearly 400 units to the market since 2021. These developments, predominantly located near downtown Royal Oak, cater to the growing demand for rental options and illustrate the city’s capacity to support a wide range of rental units.
Royal Oak has long been a sought-after destination, celebrated for its vibrant urban life, cultural attractions, and appealing amenities. Developers are obviously keenly aware of this popularity, and these projects show they’re recognizing the potential for substantial returns on investment here.
So landlords, take note: This trend signifies a lucrative opportunity to either invest in multifamily properties or convert existing single-family units to meet the rising demand.
The Market’s Response to Rental Demand
The analysis conducted by Urban Strategies LandUseUSA highlights that the rental market in Royal Oak is robust, with no apparent limit to the number of rental units the city can support.
The report also indicates that the city’s rental market is thriving, with healthy demand from tenants. Moreover, the report indicates a significant segment of the incoming renter population will be price-conscious, with half seeking rental options under $900 per month.
For landlords, this means there is an ever-present demand for rental properties, especially those that offer affordability and quality.
With detached properties in Royal Oak starting around $1,800/month, that means duplexes or apartments are the only feasible option for many of these tenants. So focusing on multi-family units certainly makes sense here for investors.
Strategic Investment in Multifamily Units
As Royal Oak continues to attract renters, our advice to landlords is that they should consider strategic investments in multifamily developments.
Whether through new construction or conversion of existing properties, focusing on multifamily units can meet the growing demand while maximizing returns.
The city’s ability to support a diverse range of rental options, from high-end luxury apartments to more affordable units, offers landlords the flexibility to target various market segments.
So, take a cue from the big developers, and start renovating now to meet this future demand
Staying ahead of development news stories like these is key to smart investing.
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