HOUSINGNEWS REPORT
FEEDING THE SINGLE FAMILY RENTAL BEAST
2.6%
OCTOBER 2018 SFR MARKET SHARE BY INVESTOR SIZE
“People are aware that there is a bigger fish behind them. They are making business decisions based on what they can sell to the bigger fish.”
6.4%
4.0%
100+ 11 TO 100 6 TO 10
8.5%
3 TO 5
GREG RAND CEO, OWNAMERICA
1 TO 2
78.6%
“We’re doing a combination of direct mail, phone calls, emails. The response rates are higher than we expected although the sample size is small,” he said, noting that this marketing campaign is facilitated by a big data initiative the company completed last year to map every single family rental home and its owner nationwide. “We’ve developed a tool called the portfolio analyzer. We’ve mapped them all and we have the characteristics of them as well as their ownership. We can light up a map and show the ownership of any group.” Existing SFR homes that represent prime potential inventory are then matched to prospective buyers visiting the Roofstock website. “We have thousands of investors who fill out buy boxes on our website,” Beasley said, explaining that this wealth of data on prospective buyers allows Roofstock to match the right inventory to the right buyers “in a much more efficient way than the institutional investors could if they just put those properties on the market.” Assembly Line of SFR Inventory OwnAmerica has traversed a similar path toward establishing an “assembly
line of inventory” to fill the seemingly insatiable appetite for single family rentals, according to CEO Greg Rand. “We released a major technology piece this year that allowed us to underwrite every SFR in the country,” he said, noting that real-time underwriting will facilitate faster transactions. “Everyone is demanding that their underwriting be friction-free … to consolidate channels to allow to people to buy, buy, buy.” Rand posited that a more clearly defined food chain has emerged in the SFR marketplace, with the big fish in that food chain driving decision- making for the smaller fish. “People are aware that there is a bigger fish behind them. They are making business decisions based on what they can sell to the bigger fish,” he said, noting that 60 percent of the SFR transactions on the OwnAmerica platform go to large institutional buyers. They are backed by insurance companies, pension funds sovereign wealth.” The newer wave of institutional capital pouring into the maturing SFR marketplace is also driving
consolidation of businesses that service the marketplace, according to Rand. One example is Amherst Holdings, which owns more than 20,000 single family rentals and in September announced a $1 billion investment in its subsidiary Bungalo, a fix-and-flip operator capable of producing turnkey SFR inventory. Institutional investors are increasingly turning to iBuyers like Bungalo for inventory, according to an ATTOM Data analysis of sales by four prominent iBuyers: Opendoor, Offerpad, Knock and Zillow. That analysis shows that the share of iBuyer home sales going to institutional investors — entities purchasing at least 10 properties — has increased from 3.7 percent in 2016 to 9.1 percent so far in 2018. Another example of SFR businesses consolidating is Roofstock acquiring property management firm Streetlane in July, according to Rand. “The businesses of SFR (are) starting to see the beginning of what I believe is going to be a feverish activity of starting a new business line or merging with a complementary (business),” he said, acknowledging that OwnAmerica is “one
3
NOV 2018 | ATTOM DATA SOLUTIONS
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