Grant Cardone Says 'Owning Rental Properties Will Pay Big Dividends' As U.S. Rents Hit Highest Levels Since 2022, With Gen-Z And Baby Boomers Fueling Market Boom

Real estate mogul Grant Cardone said that owning rental properties will be profitable amid a surge in U.S. rents, which reached their highest level since 2022.

The median asking rent increased 0.8% year over year to $1,653, according to a Redfin report, driven by high demand from Gen-Z and baby boomers who prefer renting over buying. Cardone noted that the demographic shift, coupled with a shortage of affordable housing and high mortgage rates, has solidified rental properties as a lucrative investment.

"Owning rental properties will pay big dividends," Cardone said Sunday on X. "GenZ prefers leasing and renting over the concept of ‘ownership,' as they value mobility and flexibility — baby boomers will trade homeownership for rentals, tapping their equity for travel, investing and later for assisted living."

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The rental market has seen steady growth in asking rents for the second consecutive month, according to the Redfin report, driven in part by renters opting to stay in the market rather than deal with the unaffordable housing market. According to Fed data, the median sales price of a home has surged to nearly $421,000 as of the first quarter of this year. 

"Demand from young renters remains high, as many of them are opting to stay put rather than contend with an increasingly unaffordable homebuying market," Redfin Senior Economist Sheharyar Bokhari said in the report. "But so far, rent price growth has been limited because there are enough new apartments to meet demand, even in the busiest time of year for the rental market."

As institutional investors step back from the market, Cardone suggested that individual investors should capitalize on the growing rental demand, saying, "50 of the largest cities have rental costs that are about 50% of the cost of homeownership," which makes rental properties an attractive investment opportunity.

The trend is supported by a stable rental vacancy rate, which has remained at 6.6% for the past three quarters.

The median asking rent in May was just $47 below August 2022’s record high of $1,700, Redfin said, indicating affordability challenges for some renters. Washington, D.C., according to the report, led with an 11.1% year-over-year increase in median asking rents, followed by gains in Cincinnati, Chicago, Virginia Beach, and Minneapolis.

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Despite the hot market, some regions in the Sun Belt saw declines in asking rents. Cities including Jacksonville, San Diego, Austin, Seattle, and Phoenix saw the sharpest drops, attributed to an oversupply of apartments built during the pandemic boom.

Likewise, actual housing demand and competition are wavering in states like Florida as listings increase and price drops surge. North Port saw the number of homes for sale surge by 68% year over year, one of the highest increases among the metros Redfin studied.

At the same time, the median price per square foot declined by 1.2%, and 42.6% of sellers are reducing their asking prices, up from 36% a year earlier. In Cape Coral, inventory has grown by 64%, the median price per square foot has dropped by 2.9%, and 37.5% of sellers are lowering their prices, compared to 32.9% last year.

According to Cardone, areas like that may be prime for individual investors looking to purchase an investment property.

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