Economic and demographic changes have really juiced up demand for single-family rental housing (SFR) and it’s spawning excellent business opportunities for investors and property management firms.
Back in 2014, many investors and managers were wondering about the wisdom of adding single family houses to their property mix. Today, they’re reaping the rewards of acting on those real estate trends and being proactive. SFR remains one of the most reliable investments for most participants in the real estate housing market of 2024.
“SFR make up roughly 16 million units – nearly 13.0% of all housing stock and 36% of all rental households” — Pintar Investment Company. from report by Walker & Dunlap entitled MARKET INSIGHTS ON SINGLE-FAMILY RENTAL (SFR) BUILD-FOR-RENT(BFR) ACTIVITY IN THE U.S.
Definition: SFR encompasses a cluster of single family detached homes, townhomes and duplex properties.
The way the pandemic has played out for residential lifestyles (people moving from high density urban housing to low density suburban and rural housing), the demand for more living space, and how single family units are in short supply, the result is higher rent yields in SFR.
Interest in SFR keeps growing and it will become a key topic in property management conferences in 2023. Yes, multifamily and apartment rentals are enjoying a recovery too, yet their rate of asset appreciation may not compare to the top SFR rental yields you can read about below.
For sometime, the market has been about higher priced products whether luxury houses, vacation rentals, vehicles, house renovation, and even appliances. The lower end of the market including apartments isn’t being served given real lower-income earner wages are stagnant, stimulus has ended, and manufacturing/construction costs are too high.
The single-family market is beginning to grow with the housing market downturn and prices are dropping. This fall may be the right time to build their single-family portfolios.
For property managers and new property management startups single family offers more opportunity for additional service revenue. This hasn’t been explored fully yet, however the growing built to rent segment is in a position to charge these add-on service features.
SFR properties are enjoying lower vacancies and longer lease periods. And these types of properties perform much better when managed using a property management software for this market.
Some property management firms prefer to specialize in SFR properties, a few of which will buy their own properties.
And more good news is that wages in single-family neighborhoods are rising faster than rents in 379 of 495 counties studied in a SFR report by Attom Data. Of course, inflation will eat into everyone’s investment returns. The SFR market might suffer less than others in 2022, given house renters will be willing to spend more.
Zumper reports that apartment rents were up 14% year over year (still up high now in September 2022), so there is no mercy for anyone who continues to live in an apartment.
There is potential for house rental price hikes as the economy recovers.
As more young families, families with children, and retirees look to rent single-family homes with yards and upscale amenities on a long-term basis, more investors are looking to the SFR and BFR markets to expand their portfolios and grow their capital. — rebusinessonline.com
Which US city markets offer the best rent yields this year? According to a report from AttomData, the US counties with the highest potential annual gross rental yields for 2021 are:
For counties with a least one million population, they found the highest potential annual gross rental yields are in:
The challenge for small business single-family property managers is how to grow profitability. Single-family home renters are a different group than apartment and multifamily renters.
They may be more demanding in logistics and support and the daily management/maintenance challenges are different too.
However, SFR property managers might want to look at the multifamily sector to gain insight on efficiencies and important tenant demand trends. It should be noted that tenants expectations have changed, and keeping tenants happy is a priority today.
“Residents who have a better rental experience want to stay longer”
Single family renters can and are willing to pay more and they expect more responsive services and good asset condition. They are in a financial position to reward you more for improvements and good service.
Turnover for single family managers is very costly even with zero vacancy rates. There are always costs when managers see turnover. SFH managers and startup entrepreneurs should look to optimize how they manage single family homes.
ManageCasa is focused on the SFH market and is the perfect platform to help you succeed in 2022/23. Ensure you see all the value ManageCasa can deliver on the features page.
Your challenges are made easier with a next platform designed for simplicity and to leverage the cost efficiencies of the cloud.
So how do you build a better single family property management business?
For SFR property managers, building skills and adopting automation to provide more services is important. Keeping up on state laws, fair housing regulations, real estate law, tax codes, demographic trends. New services for your firm would include professional marketing services, tenant communications, reno services, etc.
Keep in mind that its not always just what you do for tenants, but rather how you do it.
SFH management is more difficult logistically and for staying within your operating budget. Using the right property management software allows you to maintain the property well, and cut your maintenance fees, costs, and keep contractors sharp.
Efficiency is essential and that’s where your choice of property management software is so important. A software designed for SHF managers means you’re focused. For property management firms, looking to attract new clients, corporate investors will be looking at how you manage houses and the quality of property management software you use. They’re impressed with modern management practices.
If you should choose one single-family rental management platform to help you do it all, ManageCasa is that solution.
Our platform will be your best investment decision. Learn more now about ManageCasa’s impressive automation, accounting, maintenance and tenant management capabilities.
Contact our sales team at 415 800-1245 to discuss how smoothly your transition to our powerful platform will be.