HOUSINGNEWS REPORT
CHANGING SEASONS OF OPPORTUNITY
Q1 2018 SINGLE FAMILY RENTAL GROWTH BY INVESTOR SEGMENT ANNUAL PCT CHANGE IN NUMBER OF SINGLE FAMILY RENTAL PROPERTIES
21%
20%
19%
13%
12%
9%
100+
11 TO 100
6 TO 10
3 TO 5
1 TO 2
ALL SFR
for greater return on their real estate investment portfolios. Real estate investors are building secure, cash-flowing rental portfolios as complimentary alternatives to more traditional wealth building options. In addition, we are seeing true value- add projects within neighborhoods and communities. Our clients are buying properties needing meaningful structural improvement, making those improvements, allowing for a nice return to the investor and a renovated home for the ultimate renter or homeowner to enjoy. In addition, for the first time, multifamily and SFR investors can compare return profiles on a true apples-to-apples basis. Now there are attractive and competitive private lending options for SFR portfolios and small balance multifamily properties. Investors can maximize the efficiency of both operations and capital by comparing the return -on-equity between an SFR portfolio and a multifamily project with equivalent financing packages.
“Opportunity is rising in both the single family rental construction and small-balance multifamily space for innovative real estate investors and lenders willing to adapt to the rising trends.”
communities, known as Qualified Opportunity Zones, using tax incentives — a much-welcomed market-driven approach to economic development. These Opportunity Zone investments enjoy compelling capital gains tax benefits that are particularly attractive to multifamily and single family rental investors. Opportunity is rising in both the single family rental construction and small- balance multifamily space for innovative real estate investors and lenders willing to adapt to the rising trends. The Rental Market The single family rental market continues to be promising for small and mid-tier investors. A recent ATTOM Data analysis of public record data detailed the growth in market share for these segments in Q1 of 2018.
A 21 percent increase for owners of 6 to 10 properties, and a 20 percent increase for owners of 11 to 100 properties. These investors continue to innovate and venture toward the higher yield markets that have arisen throughout the country. Counties where rent has not been outpaced by rising home prices, like the relatively overlooked “second-tier markets”, those not in the top 20 metropolitan MSAs, remain a prime target for portfolio owners with very innovative mortgage financing available. Median rent has continued on an upward trajectory for the past decade- plus. Even when the housing crisis caused median home values to fall, fair market rents continued to steadily gain (see chart on page 6). This steady return has attracted investors of all levels of experience who are looking
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SEP 2018 | ATTOM DATA SOLUTIONS
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