Editor's note: This piece originally appeared in the February 2021 edition of DS News.
The market for single-family rentals (SFR) began trending upward long before COVID-19 started influencing homebuying behaviors. Millennials discovered they could get the affordable starter homes they wanted, while avoiding burdensome down payments—and without making a long-term commitment that might limit their career and personal flexibility.
This move toward renting aligns with research conducted in 2015 by the Urban Institute, which indicated a sustained rental surge through 2030. The study projected that more than half—59%—of the 22 million new U.S. households expected to form between 2010 and 2030 would be renters, while 41% would be buyers. If this forecast proves to be accurate, then renters will represent 39% of all U.S. households in 2030.
Keep in mind, though, that neither this research nor any other projections prior to 2020 could have anticipated that the nation would be stricken by a global pandemic with the potential to change lives and priorities. In the case of the SFR market, the pandemic has increased interest in rental properties, as people working and learning from home crave more space—namely, home offices and study nooks. As bidding wars continue to push home prices up, renting can be a great alternative to buying as it enables consumers to get the house they want—with three or more bedrooms, an office, a yard, etc.—at a more reasonable cost.
In addition to home rentals, COVID-19 has brought on more investment opportunities in emerging markets such as long-term vacation rentals as remote employees have the ability to work from anywhere as long as they are connected.
As the SFR scene continues to boom, opportunity exists for both the seasoned and green investor to get in on the action. Now, more than ever, it is particularly important for investors to consider a national services partner who has the expertise, scalability, speed, and stability needed to help navigate the SFR landscape. Here are four hallmarks of an exceptional SFR services partner every investor should keep in mind.
Grasping the nuances surrounding SFR properties is critical. As investors expand their portfolio with SFR properties, they need a partner who can provide specialized support in areas ranging from title, valuations, and auction to property inspection and preservation. As many of these acquisitions involve non-performing loans and loans that have come through foreclosure, investors need to be able to trust their partner to address everything that has transpired prior to their acquiring the asset, and to get outstanding title issues cleared as quickly as possible.
Providing a centralized solution for investor’s needs can help eliminate complexities and streamline communications. While some companies may claim to be a central point of contact, be sure to read the fine print. These companies may actually farm out the work to a third party, which can result in delayed or missed communications. Having a full-service partner that has expertise and boots on the ground in every service area will help eliminate unnecessary roadblocks along the way.
Whether an investor has five or 5,000 SFR properties in their portfolio, a national partner offers a level of scalability smaller, regional partners can’t match. They are likely accustomed to processing thousands of transactions each month, which means they are prepared to take on additional volume for clients at a moment’s notice. A nimble partner is important for investors growing in the SFR market.
As investors look to buy across geographic markets, whether in the Sun Belt, where SFR activity is particularly high, or in other markets across the country, a partner with national scope can deliver consistency. For example, one partner that can deliver across an investor’s entire portfolio—and cares enough to ask about expectations and communications preferences at the very beginning—can be a difference-maker in streamlining processes and ultimately, helping to close transactions faster to further support growth.