On April 6-7, the Five Star Institute held its annual Single-Family Rental Summit at the historic Statler Hotel, deep in the heart of Downtown Dallas. The summit brought together industry executives, agents, and investors for a day full of panels, lectures, and networking on all topics related to single-family rentals and the industries that surround them.
The event kicked off with a keynote speech from Jeffrey Tesch, CEO of RCN Capital. At his job, Tesch is responsible for overseeing RCN Capital along with implementing sales growth initiatives and supervising underwriting review. Tesch has personally overseen $2 billion in originations over the course of his 12-year career with RCN Capital.
Tesch greeted the crowd with an industry overview keynote and explained that the group had gathered as an opportunity "for you, as investors, to work with experts in their fields to grow their businesses.”
The State of SFR & Preparing for The Future
The first panel of the day featured Stuart Denyer, Co-Founder and CEO of New Western; Rob Parsley, Director of Business Development for Lima One Capital; John H. Prins, Managing Director of CoreVest Finance; and Clayton Wyatts, Head of Corporate Development and Capital Markets for Roofstock (Wyatts is also the Co-Founder of Vesta Ventures).
The panel was moderated by Tesch of RCN, and it explored the topic of current trends within the SFR space, as well as the trajectory along which it is heading.
When asked, “How are the investors that use your services winning today, versus 18-24 months ago, pre-pandemic?” Denyer responded, “There is still opportunity out there … a lot of our audience are buying with the intent to resell those units.” Citing the example of the surrounding DFW housing market, Denyer noted that buyers and investors seeking homes are generating interest not only within the core metroplex, but in the cities and towns on its outskirts.
“You’re getting out of these major metro areas, but just a little step further out, and another little step further out. That’s also being magnified by the pandemic, [and] remote work has enabled people to not necessarily be based somewhere specific and bogged down in the cities, so they can move further out.”
Tesch then posed the question, “Are you seeing investors diversify, and how are they winning on your platform compared to pre-pandemic?”
“They’re winning because they’re paying the most money for an asset,” Wyatt said. “At the end of the day, you have to pay the most, and I think the way they can do that is through better tools.”
Wyatt also noted that many markets are seeing “a tale of two cities,” with investors competing against both other owner/operators within the space, as well as "competing with the retail buyer.”
Investment Strategies: Weighing Options in the SFR and BFR Spaces
The second panel of the day focused on defining investment portfolios by gaining exclusive insights from experts on construction and improvement costs, supply chain, market demand, lending terms, valuations, and exit plans.
Moderated by Jon Ortner, VP of Business Development of Inertia Decision Science for Picket Homes, the panel consisted of Daniel Kattan, Founder of Sell2Rent; Alex Offutt, Managing Director of Constructive Loans; Curtis Roddy, Founder and CEO of Roddy Real Estate Group; and Gagan Sharma, President and CEO of BSI Financial.
Poising the first question of the session, Ortner asked “What headwinds do you see for the sector in this space?” and offered it to Sharma first.
“My company sees impact on both the traditional homeowner space and therefore on the investor space. The interest rate rise is the topic du jour as I personally am a believer that rates need to go higher faster. I feel like what we are seeing is we are hitting the ceiling of what the consumer is going to be able to pay for their rental,” Sharma said. “So far, we haven’t really seen any impact on our clients’ business … everyone is doing really, really well.”
Sharma went on to say that people should keep an eye on interest rates, inflation, and unemployment as things that could affect future conditions.
Offutt was then asked how he and his company have strategized to fight market headwinds.
“We spent a lot of time the last year trying to plan for a moment like this,” Offutt said. “This is not what I would call a recent development for us, from an outlook perspective.
Due Diligence: Wisdom from the Front Lines
From common misconceptions to KPIs and tech tips, attendees were invited to tap into this panels accumulated experience of the acquisition process to maximize your own investment success.
Moderated by Tim Herriage, Executive Director of Retail Loan Development of RCN Capital, the panel consisted of Adam Gotfried of RoC Capital; and Mark Peterson, Director of Build-for-Rent for SVN/SFRhub Advisors.
Property Management: Tools and Tips to Minimize Your Management Costs
This final panel of the morning focused on the fact that property management and maintenance costs can have a material impact on your investments. Attendees were encouraged to learn how to best leverage the tools at hand and when it makes sense to engage in third-party expertise during this panel.
Moderated by Eric Delgado, Director at MCM Capital, panelists included Al Freedman, CEO of First Freedom Preservation; Randall Henderson, Residential and Commerical VP for Property Management, Inc; and Erica Nason-Stuart, President and Co-Owner of C&O Services Inc.
“The number one reason for tenant-turn is property maintenance,” said Henderson. “Rents are rising, but you can also drive NOI on the other side by significantly reducing your maintenance expense, vacancy rate, and leasing rate by having a property manager who’s a part of the process from the very beginning.”
“It’s better to be Smoky the Bear than a firefighter,” Henderson continued. In other words, it’s easier to prevent the fire rather than put it out.
“Maintenance is so important,” said Al Freedman. “By doing things right, putting in that extra money from the beginning and thinking ahead will save money, time and turnover alone.”
The Vendor Vortex
Starting the afternoon session, this panel focused on feeling the power of cutting-edge solutions that are reshaping the SFR landscape.
Dillon White, the Senior Account Executive for Rently, moderated the panel discussion which consisted of Umair Kabani, VP of Business Development for Inspectify; Brandon O’Briant, EVP of AssetVal; and Cameron Paine, VP of Industry Relations & Head of Brokerage for HouseCanary.
White directed the first question to Kabani. He asked, “What problems are you solving today and how has that changed from the last five years and what are you tackling in the industry?”
Kabani said that scaling is the primary problem that investors with 50-100 properties are having at the moment. But by using things like inspector networks and other resources that his company has, investors can quickly scale up to purchasing properties out of state or even out of country.
“Another problem that we solved is access to homes and coordination of all the scheduling. We have a customer success team that handles the coordination and access for all these inspections, so you can just talk to our team and then the inspector will then deal with our team, go get access, deal with the data and come back out and input that data into the correct system.”
Financing Strategies: Learn What to Expect
The final panel of the day focused on financing strategies and discussing new lending products, terms and capital availability within the SFR and BFR spaces.
The Chief Marketing Officer of Altisource, Michael Jansta, moderated the discussion which consisted of Martin Chera, President of Express Capital Finance; Adam Gotfried, VP of Commercial Real Estate Group at RoC Capital; and Jorge Newbery, CEO of AHP Servicing, LLC and preREO.
Jansta offered the first question to Gottfried. He asked, “Where are your current customers finding properties in today's marketplace?”
“In terms of sourcing individual properties, knocking on doors and having mailers go out to the drop down,” Gottfried said. “So, there are more and more scenarios like that where people are canvassing a neighborhood looking for signs of distressed properties whether it's the front yard house, or for utility notices.”
At the conclusion of the panel, Tesch took the stage again to deliver his closing remarks for the day.
“What a great day. I have to tell you coming to these events, especially this particular one, I always learn new things. I always think about the way the different segments of our industry all work together and come together to really make what the single-family rental industry has become” Tesch concluded. “Being able to hear how everybody pushes the same really all over and there was a ton of content today and I was really impressed. So, thank you to all the speakers today. Just a tremendous job.”
This year’s event was sponsored by RCN Capital as Host; Roc Capital as Co-Host; CoreVest, Express Capital Financing, and Residential Capital Partners as Corporate Sponsors; and HomeRiver Group and SmartRent as Partner Sponsors.