House Rental Market Growing
The Covid 19 pandemic is reshaping the rental market in the UK, Australia and US. The biggest shift occurring is the demand for single-family rental houses.
Single-family detached house rentals have traditionally been viewed as a less profitable rental asset type compared to apartments and multifamily. Too time-consuming, high-priced, too few units, too costly to fix and maintain, and tenant property damage gave houses a bad rep.
Instead, single-detached houses were purchased for their long term equity growth as real estate values soared. See more on the housing market.
Today, the single detached house is the much sought property for both equity growth and higher rent income. And demand continues to grow. The vacancy rate for single family houses is shrinking.
Single Family Index™
The Burn’s Single Family Rent Index™ is showing rising new lease rents in many cities. These have growth rates above 5%. According to their report, US single-family rents accelerated 3.8% YOY in September, roughly unchanged from August’s 3.9% YOY growth. This is down about half a percent from last year, however the pandemic has taken a toll on all rental property.
None of the markets they report on saw a rent decline. (Read more at realestateconsulting.com/burns-single-family-rent-index-september-2020 ). With a rise in home construction and new home sales records, we can see the single-family housing market is the place to be in 2021.
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Some of the best cities to buy rental property rank high due to their greater listings of single-family properties. A house with multiple bedrooms, bathrooms, yard space and storage space describes paradise for many renters and a brilliant opportunity for real estate investors.
Millennials, Work at Home, and Virus Evaders
Aging millennials who can’t afford to buy a house, yet have the opportunity to move away from urban centers, and others who just want a safer, transit-free, suburban or rural lifestyle, and many Covid 19 evaders are seeking houses for rent.
“Given demographic trends RCLCO forecasts much greater demand than the current pace of production, which could result in a significant supply shortfall, suggesting the sector presents a strong market opportunity in the coming decade,” — Globest report.
There will be a supply shortfall, including built to rent detached houses: “Based on current trends, RCLCO believes the single-family rental market will likely be undersupplied over the next 10 years, despite the increased attention the segment is currently receiving.” — RCLCO Real Estate Advisors.
And the yields from rental houses are eye-opening as you can see below.
Old Attitudes Toward Single Detached Homes
For property management companies, houses are an asset type that needs specialized skills but which could be very profitable to pursue. Even institutional sized real estate companies are pursuing detached properties because the future looks so bright in houses.
Property investors have shied away from single-family homes because they don’t believe they could be managed efficiently. Multifamily was the target. If you have a good real estate management system however, you can reassure your owners that single-family might be the best rental asset possible – managed by your team.
Optimizing Single Family House Management
From subdividing the house for more tenants, to appliance and furniture rental, to security and outdoor lighting installation, hot tubs and lawn care, digital tech services, there’s plenty more ways to make single-detached house rentals a focal point for your property management business.
We’ve got some strategy tips below that will help you achieve that goal.
The takeaway from this post is to keep the faith and perhaps focus more fully on the growing single-family rental market. You can use your platform’s marketing system to build your brand around single-family mastery, giving you an edge on other property management companies who generalize or lean to apartment clients. Investor clients like specialized skills so you can lower your risk by excelling at single-family home management.
Single family housing is in demand for a variety of reasons, and that will drive up single-family rent prices. It’s an excellent and trending property type to be managed.
Top Single Family House Rental Markets
Economic and political trends are making SFR detached houses highly sought with excellent profit yields too.
According to a study conducted by Home Union, these 10 metro markets came out on top. These stats are a little out of date, which means right now, with low mortgage rates, and increased demand during the pandemic, the yields could be much higher.
1. Charlotte – 12.15 Rent yield
2. Orlando – 12.8% rent yield
3. Baltimore 19.8% rent yield
4. Cincinnati – 21.6% rent yield
5. Jacksonville – 15.6% rent yield
6. Birmingham – 15.1% rent yield
7. Tampa – 15.9% rent yield
8. Indianapolis – 15.5% rent yield
9. Milwaukee – 20.7% rent yield
10. Nashville – 13.3% rent yield
Of course, houses will higher rent prices, more maintenance and repairs, and are an opportunity to sell additional services. For a property management firm, the value proposition is compelling.
Trending Single Family House Factors
There are a number of property management trends for single-family units:
- work at home means living in a multi-room house, within a home office
- migration out of dense urban areas to rural areas where most house building is happening
- accelerated need for digital service delivery because of distances
- individual profit margins on all rentals shrinking making efficient management even more relevant
- challenge from big rental property conglomerates trying to buy up properties
- tenant rent default as rents rise along with regional employment trends
- government regulation threats from safety to renter protection
Make Owners Want to Hire You
Make it Easy for rental owners to hand their rental houses over to your management company. Many owners don’t have the systems, skills and profit-making power you have to take it another level. From inspections to HVAC, windows, roofing, security, to digital services, your complete value offer is compelling.
Your whole approach to rental property management is clear to them — you have the system to do it better and keep doing it better for greater profitability. From marketing to tenant communications, you can streamline everything for you happy new owners.
What’s Needed to Manage a Portfolio of Single Family Houses Better?
- improved renter lead generation – focusing on serious, financially capable house renters, often families who need the rooms and extra space and who will stay put for years — ensuring your lead funnel is optimized and always full
- improved rental advertising – improved visibility to the best renter audiences and writing ads in the most compelling way
- better tenant screening – new tools to ensure you have renters of the quality needed to minimize occupancy term losses
- improved accounting and financial management – accounting automation to minimize transaction errors, keep accounts separate, and view informative reports
- mobile responsiveness and mobile user focus – mobile-friendly property management platform to serve digital hungry renters
- automation tools – automating maintenance communications, scheduling, tenant communications reduces personnel-related expense
- communications tools to inform, gather feedback, and respond well to tenant’s inquiries and issues
- better maintenance using contractor technicians who respond quickly
All of these key service areas can be managed effectively with a modern property management platform such as ManageCasa. ManageCasa is easy to learn and use, and keeps you highly informed about your house rentals.
Greater Costs and Risks? Problem Solved
The management of single-family houses comes with greater costs and perhaps more face to face personalized communications with tenants. The personal touch shouldn’t be underestimated. Renters paying higher rent prices don’t want to be automated out of touch or neglected. They expect responsive service which your management platform will help you create time for.
Scheduling rental maintenance work orders, enabling online rent payment, and useful tenant portals are important to tenants who want comfort, ease, and peace of mind. Keep these in mind.
And it’s important for you to keep up the home’s mechanical condition, exterior, and plumbing and electrical to reduce replacement costs and emergency costs.
Your New Property Management System: ManageCasa
Online interaction with your property management system helps you to feel the pulse of your renters and understand what their experience is and how they’re feeling. You need this feedback from their responses.
Modern digital property management tools help you understand your renter’s specific needs and preferences. With this, you’ll know how to keep them happy and perpetually under lease.
Your owner clients will be happy and confident when you’re using a property management solution that’s easy to use and understand. From owner reports to owner disbursements, they’ll have everything they need to know you’re the best property manager they’ve ever had.
Check out ManageCasa now and ask for a solution Demo.
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See also: Property Management Software Application | Rental House Renovation | Apartment Renovation | Start Property Management Business | HOA Management Software | Property Management Company | Choosing a Property Management Company | Rental Advertising | Property Management | Rental Market | Houses for Rent | Find Property Management Services Firm | Rental Software | Property Management News | Switch Software | Managing Property Expenses | Property Management Market | How to Increase Property Management Profitability | Write Rental Ad | Best Cities for Rental Property | Housing Market