Want to know a primary reason for our housing market’s severe inventory shortage? Check out the percentages of single-family homes around the country that are not for sale and are not owner occupied:
– Las Vegas 30%
– Wichita 32%
– Kansas City 26%
– Detroit 45%*******
– Baltimore 33%
– Memphis 33%
– Baton Rouge 27%
– Tulsa 32%
– Oklahoma City 33%
During the housing crisis, Wall Street investors and companies such as Blackstone, America 4 Rent, HomeUnion and Investable (as well as “mom and pop” investors who bought 1-5 homes near where they lived) scooped up thousands of homes in foreclosure at fire-sale prices. Those investors and businesses fixed up those homes and put them back on the market to rent, not to fix, flip and sell.
Fast forward to today. Those initial players in the rental market are now joined by companies such as Roofstock, a leading tech platform that offers long-distance investors an opportunity to buy single-family home rentals anywhere in the US.
According to ATTOM Data Solutions, there were 43,329 renter-occupied housing units in Quarter 2 2018. That number remained basically unchanged from Q2 2017 and Q2 2016. ATTOM also indicated that the gross annual yield is +10.3%, including an annual 5% vacancy factor, for single-family rental (SFR) owners.
Many SFR owners own their properties in areas often thousands of miles away from where they live and pay rent. Those SFR owners can’t afford to buy homes where they live so they pay rent to work and live in those top tiered markets with the income generated from their tenants living in their SFR homes.
Outfits such as Roofstock make it “easy “ to become a SFR owner. The platform offers potential investors exact address, inspection reports, tenant occupancy histories, current rent information, neighborhood quality reports, information about property taxes and maintenance fees, local property managers and local construction services networks so owners can negotiate jobs and fees for onsite work and services the owner might want or need.
Daren Blomquist, senior vice president of ATTOM, cautions potential owners of SFR properties that “…most of the markets good for buying rentals aren’t going to be good for price appreciation. Don’t expect Seattle from Cleveland or Memphis…SFR owners are not going to build a long of home equity fast. “
Blomquist advises potential investors to hold on to SFR properties for as much as 20 years to realize a return. “(Investors) are best off holding (SFR properties) for the long term in order to realize increasing cash-flow returns they should be able to get as rent rates rise over time.”
Helping Priced Out Renters Become Landlords