There are countless ways to approach real estate investment. Some investors specialize in single family rentals (SFRs), while others emphasize large multi-family units. The SRO market has largely faded out of existence, but the new interest in cohousing may be reinventing this form. Whatever types of properties you typically emphasize, or whether you have a highly diversified property portfolio, it’s worth considering whether refocusing your Katy, Texas investment strategy on niche housing markets could be financially and practically beneficial.
What Is Niche Housing?
Niche housing is a way of talking about any type of housing complex or market that is built around a specific group of renters. For example, retirement communities are a type of niche housing, but so is affordable housing and even family-friendly housing can be a niche depending on how you approach it.
Why would you narrow down who can live in your rental units? Ultimately, the goal of niche housing isn’t actually about limiting your rental pool – although there are some advantages to this. Rather, it’s about building a cohesive community and ensuring that you can better serve the needs of your tenants.
Senior Housing – Units In Demand
Seniors, specifically recent retirees, are a great tenant population because they’re typically still highly independent and financially secure, but they’re also mature and responsible and unlikely to cause many problems as renters. They’re also eager renters, often in the process of downsizing from their family homes, and they make up a significant portion of the population. Choosing to develop your investment properties into senior housing, then, means creating a space designed around people who are leading quieter lives and who may not want to deal with children and teenagers on a day-to-day basis.
There are a lot of standard practices that inform senior housing communities, which you can read and use as guidelines for your own properties, but one thing you may want to consider when planning and renovating your Katy area units is what makes a property senior-friendly. Make a point of adding basic modifications like ramps, grab rails in the bathroom, and baseboard lighting, all of which are features that can improve safety and help older adults live independently for longer.
Family-Friendly Housing – A Stress Reliever
On the opposite end of the spectrum from senior housing is family-friendly housing, and yet this is another great niche for real estate investors. What makes family-friendly housing a useful category of housing?
While families can obviously live just about anywhere, tenants with young children can feel anxious about renting in a complex or building with few other families. They worry that their children will be noisy and disruptive, that their neighbors will complain, and even that their kids will be lonely. Defining a community as family-friendly housing, supporting baby-proofing efforts, and generally making it clear that the noise and chaos that comes with kids is welcome here can be a load off of young families’ shoulders.
Cohousing – All The Rage
Cohousing is, in a way, the upscale, modern version of an SRO, with hints of communitarian idealism – and this kind of housing is all the rage these days. How does cohousing work, though? While these communities are all a bit different and can range from private homes surrounding a communal kitchen, dining, and recreational core to one large unit with private sleeping areas, they’re commonly premised on sharing resources, sustainable living, and the desire to share responsibilities with others. Co-housing may be built around certain groups, like family-focused co-housing, or it may be intergenerational and include people with widely varied lifestyles.
In addition to sharing responsibilities, one reason cohousing is so popular right now is because people have become acutely aware of the isolation that has reshaped modern life. While people used to know their neighbors, these days, many people live in their own private bubbles. This may be less of a problem in a suburban area like Katy, but the appeal remains. Additionally, while co-housing tends to be more popular with young people, retired adults are increasingly expressing interest, as cohousing is a good way address isolation and concerns about safely living alone.
Manufactured Housing – Market Ready
Manufactured housing is the term commonly used to refer to trailer or mobile homes today, and it points to the reality of these properties: while they may technically be “mobile,” most of them aren’t really going anywhere. No, what makes manufactured housing appealing to investors and renters alike is that is highly affordable. And, while older trailer parks can look worn down and dilapidated, new manufactured or modular housing can be attractive and functional. They come at many price points and investors can choose how to elaborate the properties are based on the audience they want to attract.
One unusual element to manufactured housing is that, in the majority of cases, tenants are renting the land the home sits on, while they own the house. This is what makes the old “mobile” appellation so important to understanding these properties. This has added benefits for investors because it means major repairs typically fall under the purview of the unit owner, not the investor. As an investor, you’re only responsible for the upkeep of the land and associated infrastructure. That means there are fewer operating costs and less labor required.
Finding Your Niche
Many investors assume that the most profitable way to approach the rental market is by having something of an open-door policy – if you can afford the rent and have a clean financial and personal background, then you’re welcome here – and there’s nothing wrong with that approach. That being said, carving out a niche, even just for some of your properties, can make for better neighbor relations, easier oversight, and clearer applicant parameters, thereby simplifying your job.
If you’re curious about how niche housing could help you better develop your Katy rental properties, contact Green Residential today. As experienced property managers, we not only understand the benefits of defining your role in the marketplace but know the ins and outs of the real estate market more broadly. Let us help you meet rental applicants where their need is greatest, creating new communities rather than just providing a roof and four walls.