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A True Team Player

Home Depot’s Frank Blake Will Never Stop Building by Carole VanSickle Ellis Frank Blake will be the first to tell you he’s extremely grateful for his team. In fact, that is the mantra you will hear over and over in conversation if you speak with him for any length of time. “You are only as good as your team,” the Bronze Star recipient and current Home Depot general manager for Outside Sales and Service, is fond of saying. Invariably, he follows that up with something even more telling: “I want to thank everybody who has ever been on my team.” Blake credits his time in Iraq, where he was deployed in the Sunni Triangle, with demonstrating to him, firsthand, the role of an effective leader in turning a group into a high-performing team. “It’s your job to make one plus one equal three, or four, or even five,” he explained. Blake was commissioned as a second lieutenant in the U.S. Army in 2000 after completing ROTC at Clemson University, where he attended on an ROTC scholarship. He earned his bachelor’s degree in political science, minored in Japanese and military science, then went on active duty in Fort Carson, Colorado. By 2003, he was in Iraq, where he earned the Bronze Star, a United States decoration awarded for heroic achievements, merit, or valor in a combat zone. It was upon leaving the military and entering the civilian workforce he realized just how different teambuilding and leadership would look outside the military—or so he thought. Why the Home Depot? “When I started interviewing for civilian jobs, everyone essentially told me, ‘You’ll start out in a cubicle looking at spreadsheets, and when you get really good at that we will give you a bigger cubicle with more spreadsheets. It was really discouraging.” The creative and highly motivated Blake had difficulty mustering enthusiasm for this type of employment, and he began to feel discouraged and lose hope, as many veterans do when they begin seeking civilian work. Fortunately, he landed an interview with Home Depot. “Home Depot is so leadership-focused and business focused,” Blake said. “It makes starting in a store mixing paint and working the cash register feel exciting and important because you know you are part of building and growing a team.” The Home Depot culture was such a good fit that Blake knew he could trust the company to put him in a good position after he passed his store manager test, so he did not request a specific store or location. “I just told them, ‘I don’t care where I work, but I want to work for the best leader you have,’” he said. Upon completing the company’s Store Leadership Program in 2006, Blake was assigned a position in Wilmington, North Carolina, where he worked under formal naval officer Jeff Tompkins and Haydn Chilcott, who is now president of the Western Division of Home Depot and responsible for leading sales and operations throughout 13 western states. After working as a store manager for three years, Blake took on the challenge of serving as a district manager for Home Depot until 2015. During that time, he worked in the Richmond, Virginia, area and in Atlanta, Georgia. In Atlanta, he took on the challenging role of general manager of renovation services for the Greater Atlanta area, a position he held until 2018. Although he was swiftly climbing the professional ladder at the company, Blake remained humble. In fact, he still maintains being a store manager was probably one of the most stressful things he has ever done—including serving in the military—due to the sheer number of people for whom he was responsible. “You work every day for the customer, but you also have to build and maintain respect for and among all your employees and store associates,” he explained. That type of challenge was exactly what Blake needed. He credits Home Depot with saving his life. After leaving the military and combat behind him, Home Depot gave him a place to put his energy and provided focus to his life. “I love every day at this company. Every day brings a challenge and a new goal to help the customer, compete with the competition, be the best I can be, and support my team so they can be the best they can be as well,” he explained. “I’ve been with Home Depot 16 years so far and hope to stay here as long as I’m alive.” Leadership and Mentors Today, Blake still works in Atlanta as a general manager for Outside Sales and Services. Doing so has placed him in a position to meet and learn from Home Depot’s vice president of stores, Ann-Marie Campbell. “She is a great inspiration,” Blake said of Campbell, who is twice-listed on the Forbes “Most Powerful Women” list. Campbell, like Blake, is a team player, serving as an active Team Depot volunteer to give back to the local community and as a board chair for the Homer Fund, a Home Depot charity that supports associates facing unexpected financial crises or hardships. Like any good leader, Blake values others who demonstrate and exemplify strong leadership qualities. In addition to Campbell, he counts among his mentors J.T. Rieves, who he describes as “a great leader” who taught Blake the importance of customer service, Chuyu Xi, Home Depot’s vice president of merchandising and a Home Depot Foundation board member, Lieutenant Colonel (RET) Nate Sassaman, and West Pointer Shane O’Kelly, who Blake says may be the “greatest world-class leader” he has ever worked for. O’Kelly taught Blake the value of building strong relationships and always doing the right thing, while Xi modeled effective leadership and what Blake refers to as “entrepreneurial spirit”. Sassaman, he says, demonstrated for him just how important it is not just to care about the people who work with and for you but to make sure they know how much you care. “Caring for the team is vital,” Blake explained. “Your people need to know

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November Foreclosure Filings Dip from October

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Foreclosure Moratorium Extended to 2021 ATTOM Data Solutions, licensor of the nation’s most comprehensive foreclosure data and parent company to RealtyTrac (realtytrac.com), a foreclosure listings portal, released its November 2020 U.S. Foreclosure Market Report, which shows there were a total of 10,042 U.S. properties with foreclosure filings—default notices, scheduled auctions or bank repossessions—in November 2020, down 14 percent from a month ago and down 80 percent from a year ago. “It’s not unusual to see foreclosure activity slow down beginning in November and through the holiday season,” said Rick Sharga, executive vice president at RealtyTrac, an ATTOM Data Solutions company. “Both foreclosure starts and repossessions were down about 80% on a year-over-year basis, but it might be worth noting that a few cities that may be vulnerable to the pandemic-driven flight from urban areas to the suburbs—like New York City, Chicago, and Miami—were among the markets with the highest levels of foreclosure actions.” Florida, Illinois, and Oklahoma post highest state foreclosure rates Nationwide one in every 13,581 housing units had a foreclosure filing in November 2020. States with the highest foreclosure rates were Florida (one in every 7,109 housing units with a foreclosure filing); Illinois (one in every 7,285 housing units); Oklahoma (one in every 8,128 housing units); New Mexico (one in every 9,236 housing units); and Delaware (one in every 9,310 housing units). Among the 220 metropolitan statistical areas with a population of at least 200,000, those with the highest foreclosure rates in November 2020 were Champaign, IL (one in every 3,636 housing units with a foreclosure filing); Shreveport, LA (one in every 3,806 housing units); Macon, GA (one in every 3,947 housing units); Davenport, IA (one in every 4,038 housing units); and Evansville, IN (one in every 4,296 housing units). Those metropolitan areas with a population greater than 1 million that posted the worst foreclosure rates in November 2020, were St. Louis, MO (one in every 4,454 housing units); Cleveland, OH (one in every 5,368 housing units); Jacksonville, FL (one in every 5,877 housing units); Louisville, KY (one in every 6,373 housing units), and Birmingham, AL (one in every 6,591 housing units). Foreclosure starts decline monthly nationwide A total of 5,256 U.S. properties started the foreclosure process in November 2020, down 13 percent from last month and down 79 percent from a year ago. While foreclosure starts are down in many states across the nation, a few states did see monthly increases in foreclosure starts in November 2020, including Missouri (up 18 percent), Indiana (up 14 percent), Georgia (up 4 percent), Arizona (up 1 percent), and Texas (up 1 percent). Among metropolitan areas with a population greater than 1 million, those with the greatest number of foreclosure starts in November 2020 were New York, NY (454 foreclosure starts); St. Louis, MO (208 foreclosure starts), Chicago, IL (207 foreclosure starts); Miami, FL (151 foreclosure starts); and Los Angeles, CA (147 foreclosure starts). Bank repossessions see a 22 percent decline from last month Lenders foreclosed (REO) on a total of 2,010 U.S. properties in November 2020, down 22 percent from last month and down 86 percent from a year ago. States that posted the greatest number of completed foreclosures (REOs) in November 2020, included Florida (273 REOs filed); Illinois (167 REOs filed); California (164 REOs filed); Arizona (141 REOs filed); and Georgia (117 REOs filed). Among the metropolitan areas with a population greater than 1 million, those with the greatest number of REOs filed in November 2020, included Chicago, IL (114 REOs filed); Phoenix, AZ (93 REOs filed); Atlanta, GA (88 REOs filed); Birmingham, AL (60 REOs filed); and Miami, FL (58 REOs filed).

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Connect the Dots to More Seller Leads

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Utilizing Technology and Data to Optimize Marketing Performance by Robert Rakowski Lead generation and financing are likely the two most challenging aspects of real estate investing. HomeVestors®, the We Buy Ugly Houses® people, is America’s #1 Homebuyer and generates more motivated seller leads than any competitor in the discount homebuying business. Enter Charlie Calise and Imaginuity Charlie Calise is the Chairman of Imaginuity, an integrated marketing agency located in Dallas, Texas. For over ten years, Calise has handled the marketing and advertising efforts for HomeVestors of America and the famed We Buy Ugly Houses brand. Imaginuity provides integrated marketing services throughout the entire seller journey, including brand experience, advertising, traditional and digital media buying, paid and organic search, social media, web development, UX, data analytics and database marketing services. The Homeowner’s Journey to Sell Is Not Siloed, Neither Is HomeVestors Approach Most companies take a siloed approach to marketing. For example, there may be one team (or agency) executing direct mail or television campaigns and another executing paid search or online display advertising. Additionally, there could be different agencies working for individual franchisees, companies, or regional groups. In some instances, these teams or agencies do not always communicate well together which can create a great deal of friction, inefficiency, and poor cross-organizational sharing and learning. The Imaginuity approach for HomeVestors is to bring everyone together under one agency, all armed with data insights from a customer data platform like AdScience®. According to Calise, “When one integrated team—subject matter experts, media planners, direct mail specialists, broadcast buyers, SEM experts, data analysts and web developers—has shared, real-time access to information about what is working to generate seller leads, and what is not, they are able to make more meaningful cross-departmental connections and collaborate better. New ideas can flourish, and campaigns can be efficiently optimized, resulting in more, highly motivated seller leads.” The Secret Sauce—AdScience® Customer Data Platform Imaginuity manages almost two billion rows of first, second and third party data to make smarter marketing decisions for HomeVestors.  AdScience®, Imaginuity’s proprietary Customer Data Platform, is leveraged with two goals in mind: to measurably improve the quality and quantity of motivated seller leads and provide an unprecedented level of transparency into all the client’s traditional and digital media performance. “With this platform we help generate almost 100,00 leads per year for HomeVestors, and AdScience® aggregates an incredible amount of data to provide seller insights into every one of those leads.  HomeVestors’ powerful CRM system, powered by Salesforce, along with the AdScience customer data platform, makes HomeVestors the most sophisticated home-buying lead generation system in the industry,” said Calise.  Additionally, “It is no wonder that the independent HomeVestors® business owners are widely recognized as the most successful home buyers in the industry.” According to David Hicks, CEO of HomeVestors, “We remain the #1 homebuyer in America to this day. We have purchased more than 100,000 houses, which is why we say we have been leading the industry since the day we began franchising in 1996.” AdScience® collects an abundance of data, including offline and online media performance, and demographic, behavioral, customer journey and transactional data, to provide timely, intelligent visualizations and actionable reporting for Imaginuity, ultimately making it easier to measure what is most important to converting more sellers. This also allows HomeVestors to extract the highest value out of every marketing and advertising dollar spent. AdScience® connects marketing data with customer data to effectively activate custom audiences across multiple media channels. This approach allows Imaginuity to optimize marketing campaigns toward audiences that are most likely to sell their house. “Utilizing data from such sources as the USPS, First American, Google, Facebook, The Trade Desk, Experian, Nielsen, and CoreLogic, we look at almost three-billion rows of data to understand who has previously sold houses to HomeVestors and how to get new sellers who look just like them,” explained Calise. “These look-alikes have a higher likelihood of doing business with them.” There are hundreds of offline and online media channels available to reach customers. They can be reached in home through direct mail, traditional broadcast television or streaming through OTT (over the top) platforms such as Netflix or HULU, or on the go through out-of-home media and SMS text campaigns delivered to smartphones or watches. To manage today’s marketing complexity, companies must look for ways to connect the dots of multiple customer touchpoints along the path to sell. This approach allows for the delivery of the right message to the right customer at the right time on the right channel, all the way down to their device of choice. Refine your Media Mix Take a smarter approach to attribution. While many customers may appear to convert online (for example, scheduling an appointment on a website), their journey may begin offline where they were first reached by traditional media such as direct mail or television. The most effective marketing approach today is to track a seller’s behavior as they pinball between multiple offline and online media touchpoints, across different devices, on their journey from awareness to conversion. Understanding these conversions, or attribution paths, and which media types play nicely together can help you get the most out of every media dollar spent. Connect Organic and Paid Search to Take You Higher Today when customers are looking to sell, they often use search engines to find what they are looking for. In fact, over 90% of all web traffic comes from search engines, and 75% of Internet users do not look beyond the first page of search results before clicking. In addition, 46% of all Google searches are linked to something local. So, ranking highly in paid and organic search engine results is a top priority. This can be accomplished through an ongoing search engine optimization (SEO) program. However, this may not be all you need. To get the best results from search, your SEO program should be tightly integrated with paid search (PPC). Home sellers rely heavily on search engines to find what they are looking

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The Future of Opportunity Zone Tax Benefits for Real Estate

A Legal Perspective on Benefits, Requirements and Criticisms by Jenny Connors The opportunity zone (“OZ”) tax incentive, which was enacted as part of the Tax Cuts and Jobs Act, has been a major catalyst for real estate investment over the past three years. Initiated as a bipartisan effort for economic growth and job creation, the incentive was intended to promote long-term, private investment in America’s low-income communities. The incentive, however, has long come under criticism for failing to meet its objectives. This article includes a brief summary of the incentive’s tax benefits and its requirements for qualification, as well as a discussion of the future of OZs and foreseeable changes under the Biden administration.    OZ Tax Benefits There are three primary components of the OZ tax incentive. First, the incentive offers electing taxpayers an opportunity to defer tax on eligible capital gains if they invest those gains on a timely basis in an entity taxed as a corporation or partnership that self certifies as a qualified opportunity fund (a “QOF”). Generally, the applicable QOF investment period is 180 days following a gain recognition event. However, there are several regulatory exceptions to this rule. For instance, the 180-day period for partners allocated partnership gains begins on the last day of the partnership’s taxable year or, if a partner so elects, on the due date of the partnership’s tax return (without extensions) or the partnership’s recognition date. The deferral period for all taxpayers, though, regardless of the date of investment, ends as of December 31, 2026.  Any gains recognized after that date are ineligible for OZ tax benefits. Second, taxpayers can qualify for a partial tax reduction on their deferred capital gains if they invest in QOFs by certain dates. Specifically, taxpayers who hold their qualifying QOF investments for at least 7 years prior to December 31, 2026 get the benefit of a 15% tax reduction on their deferred eligible gains. To satisfy this timeline, taxpayers needed to invest eligible capital gains in a QOF on or before December 31, 2019. Taxpayers who missed this deadline may still be eligible for a 10% tax reduction, so long as they invest such gains in a QOF prior to December 31, 2021 and continue to hold that investment as of December 31, 2026.  After 2021, the partial reduction benefit expires, and there is no option for taxpayers to reduce the tax owed on their deferred capital gains.   Lastly, taxpayers who hold their qualifying QOF investments for at least 10 years and make a valid election can benefit from a tax exclusion on the appreciation of their QOF interest. Basis adjustments taken over the life of the QOF interest facilitate this exclusion. When a taxpayer makes a qualifying investment in a QOF, he or she takes a $0 basis in the QOF interest to preserve his or her unrecognized capital gains. As of December 31, 2026, when the deferral period ends, the taxpayer’s basis is increased by the then-recognized gain, plus the tax reduction amount, if any. Upon a sale or exchange of the taxpayer’s QOF interest, and after a 10-year hold, he or she can elect to increase his or her basis in the QOF interest to its fair market value immediately prior to the sale or exchange. In so doing, the taxpayer’s amount realized (i.e., gain less basis) is equal to $0, and the taxpayer recognizes no gain on the transaction.  Treasury Regulations extended the 10-year gain exclusion election to sales of QOF assets, including sales of qualified opportunity zone property (“OZP”) and qualified opportunity zone business property (“OZBP”). In those instances, the taxpayer may elect to exclude the asset sale gain, provided that he or she has held his or her QOF interest for at least 10 years. OZ Requirements At least 90 percent of a QOF’s assets must be OZP. OZP includes OZBP or equity interests in subsidiary businesses.  Typically, QOFs investing in real estate opt for the latter, specifically holding qualified opportunity zone partnership interests.  Referred to as the “indirect” structure, the QOF holds the partnership interests in satisfaction of the 90 percent OZP requirement. Those partnership interests must be acquired after December 31, 2017, and the underlying partnership must be a qualified opportunity zone business (an “OZB”). While OZBs are subject to additional requirements, the indirect structure, which necessitates an OZB, ultimately provides QOFs with greater flexibility in deploying cash and satisfying asset thresholds.   An OZB must derive at least 50 percent of its total gross income from, and use a substantial portion of its intangible assets, if any, in, the active conduct of a trade or business within a designated OZ. Less than 5 percent of its assets may constitute nonqualified financial property, including, among other things, cash (other than reasonable working capital, including amounts to be deployed within a 31-month period pursuant to a written plan), debt, stock and subsidiary partnership interests, and no part of the OZB’s business can constitute a “sin” business. Most importantly, though, substantially all, or at least 70 percent, of the tangible property owned or leased by an OZB, if any, must be OZBP.  OZBP includes tangible property, real or personal, that is acquired or leased after December 31, 2017.  For purchased OZBP, its original use in the OZ must commence with the OZB, or it must be substantially improved within a 30-month period. Substantial improvement generally requires an OZB to spend at least the amount of the property’s acquisition cost (less, in the case of real property, amounts allocated to land) on improvements. Finally, for at least 90 percent of the OZB’s holding period, OZBP must be used within an OZ.  OZ Criticism and Potential Changes The OZB and OZBP requirements lend themselves to realty, which is stationary within an OZ.  Consequently, most OZ projects are real estate based. Critics of the OZ incentive have noted that its heavy real estate usage leads to problems of gentrification and results in few, if any, jobs for residents of low-income communities. While

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Salt Lake City, Utah

The “Crossroads of the West” Boasts Enduring Strength at the Core by Carole VanSickle Ellis With a housing market holding strong in both single-family and multifamily sectors, an unemployment rate under half the national average in the last quarter of 2020, and an emerging trend in interstate “near-shoring” as West Coast businesses move operations inland to avoid high taxes and stringent health policy restrictions, the Salt Lake City real estate market is a shoo-in for “most likely to succeed” in 2021. However, as every real estate investor knows, the hottest markets do not always represent the best opportunities for investors who tend to operate on the age-old maxim of “buy low and sell high”. In Salt Lake City, as in many markets around the country, real estate investors must leverage market insights, creative deal structuring, and innovative strategies to continue to acquire and optimize assets in this thriving market. A Study in Resilience “The coronavirus economic shutdown sent home sales tumbling in April and May [of 2020], but the downturn appears to be short lived,” the Salt Lake Board of Realtors said in a late-October press release on the local housing market. The group reported buyers were taking advantage of record-low mortgage interest rates in order to move into the suburbs, and predicted the spring buying season would easily extend into summer and fall. Median home prices rose dramatically, up 10 percent year-over-year in Q3 2020 compared to Q3 2019. With housing affordability reaching all-time lows, that median home price is six times higher than the average Salt Lake City household is earning. Even with low interest rates, many residents are on the lookout for better living options that will enable them to remain in the metro area and take advantage of the booming jobs market. One local resident who recently relocated to the SLC metro area from Ontario, California, told a local newspaper there were 26 job openings in her specialty as an account manager when she began looking at making a move. However, with other areas of the country posting nearly 14 percent unemployment and the national rate hovering just over 9 percent (compared to Utah’s 4.1-4.5 percent unemployment rates in Fall of 2020), that individual was not alone in applying for jobs or once accepted, looking for somewhere to live. The housing inventory and home prices reflect that. “We are going to struggle to do deals because of a lack of inventory,” warned Mike Ostermiller, CEO of the Northern Wasatch Association of Realtors. The Wasatch Range of mountains runs south of the Salt Lake City metro area and is a highly desirable place to live for people remote working or who plan on commuting into the city when their employers reopen office spaces. Ostermiller added that Utah and SLC had experienced nearly five years of rising home prices prior to the COVID-19 pandemic, which an increasing number of economists are describing as a trend “accelerant” driving residents out of metropolitan areas and into suburban and rural settings. James Wood, a senior fellow at the University of Utah’s Kem C. Gardner Policy Institute, recently predicted Utah [and, by extension, Salt Lake City] would likely continue to see a “serious housing shortage” even as residents begin to experience housing instability because of long-term unemployment in certain economic sectors. New construction of single-family homes, condominiums, and apartments fell in 2020 due to COVID-related restrictions, thereby exacerbating the pre-existing 50,000-home shortage. Tracing the Near-Shoring Trend For real estate investors hoping to take advantage of Salt Lake City’s strong economy and jobs market by providing homes for sale or rent in the highly competitive market, the key to acquiring properties and making the most of every potential lead is definitely in the details. With a diverse economy, relatively strong success in containing COVID spread during the Thanksgiving holidays (the final verdict on Christmas is still out), and public schools that remain largely open, Salt Lake City is looking better and better to the newly mobile U.S. population. The existing local population is attractive to employers as well; SLC boasts the youngest median age talent pool in the country and a host of recession-resistant industries. “Utah is ranked the most diverse economy in America,” explained Colliers International-Utah chairman Brandon Fugal. “While most markets are certain to be impacted by the pandemic, Utah’s financial, technological, and health and wellness sectors should actually gather strength.” There is plenty of evidence to back Fugal’s predictions. Amazon, Facebook, and Tyson’s Foods are already expanding into the market, even pre-leasing office space in some cases. Other tech companies are following suit, snatching up industrial/flex space as fast as industrial developers can make it available. According to Adam Long, who serves as COO and director of special products for Colliers International-Utah, the strength of the local market stems mainly from an economic shift that occurred in Salt Lake City and the surrounding area in the early 2000s. “High tech, real estate, wellness, and manufacturing are eclipsing the previous economic drivers from 20 years ago…mining and agriculture, as the most prominent forces of expansion,” he said. Investors should track movement into Utah and into Salt Lake City and its surrounding suburbs by companies previously based in other states and by international corporations. Wherever commercial development attracts these entities, opportunities for residential development and residential real estate returns will soon follow. For example, in September 2020, Salt Lake City forged ahead with plans to open The New SLC, the city’s $4 billion international airport and, in the midst of the pandemic-induced recession, Salt Lake City posted the largest single-phase office transaction in state history. Long observed, “Even during COVID-19…Blackstone invested $4.7 billion to acquire Ancestry.com and SunRun acquired Vivint Solar for $3.2 billion…. There is a mutual understanding that Utah will come out of this stronger than before.” Ancestry.com is based just 25 minutes south of Salt Lake City, while Vivint Solar is headquartered in SLC itself. These tech companies and many others make up the “Silicon Slopes” population in

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A Different Vision for Housing

A Unique Strategy Keeps American Homes 4 Rent Ahead of the Curve by Carole VanSickle Ellis American Homes 4 Rent is a relatively young company. First conceptualized in 2011 when national indices were ranking “improvements” in housing based on the degree to which a market was losing in the single digits instead of double ones, the company was the first Wall Street institution to snap up single-family homes during the Great Recession. That was not at all what American Homes 4 Rent intended to do, however. The founders’ ability to view opportunities and potential threats in the housing market from a completely different angle than the rest of the financial powerhouses of that era has set American Homes 4 Rent apart ever since. “When we formed American Homes 4 Rent, we had a very different vision than that of our peers later,” recalled David Singelyn, CEO and trustee for the company. “While they viewed the 2011 market as an opportunity to buy houses at an attractive price and resell later when the market recovered, essentially taking the opportunity as a trade, we saw it as a chance to acquire homes and create a platform that would truly scale over time while offering residents a chance to live in desirable, affordable homes and investors a chance to invest in a company complete with its own drivers to growth.” Replicating Success by Starting “From Scratch” American Homes 4 Rent was first conceptualized in 2011 by American self-storage billionaire B. Wayne Hughes, who is ubiquitously referred to by his middle name. Hughes served as chairman of the board from the company’s founding in 2012 until 2019, when he retired at the age of 85. By that time, the company had nearly 53,000 single-family rental homes under management and was providing housing to roughly 200,000 residents while creating more than $1 billion in annual revenue. Singelyn credits the company’s wild success in residential real estate to leadership figures who understand many aspects of the real estate market and have great experience and successful track records in other sectors of the market. Hughes himself had founded one of the nation’s largest real estate investment trusts (REITs), Public Storage, four decades prior to launching American Homes 4 Rent and had founded a real estate company, American Commercial Equities, that owns and manages retail and office properties in California and Hawaii. “In 2011, when even the biggest Wall Street firms were still learning the business, our management and leadership teams were made up of people who had historically been operators of real estate and had cut their teeth on consumer-related real estate,” Singelyn explained. Because of this deep well of experience, early leaders at the company believed it would be important to “start from scratch” when it came to creating the American Homes 4 Rent operating platform and setting the stage for its growth drivers. “We went through a number of life cycle events to get where we are today,” Singelyn said. “In the early days, we were in the middle of a land and property rush while also building the operating system from the ground up. It was all done from scratch.” The company needed a completely new take on existing operating platforms because it planned to institutionalize single-family rentals – not sell its properties when the market recovered. “We did constantly evaluate what had been successful in Public Storage and other ventures in which our founders had been involved, but that led us to focus on achieving financial flexibility rather than trying to utilize an existing system that did not fit the new company’s needs,” Singelyn explained. Access to Capital  Financial flexibility manifested as a simple concept and goal: access to capital (and assets to acquire at an appropriate price point using that capital) at all times. Because American Homes 4 Rent looks at its acquisitions in a more permanent light than other institutions in the industry, it is imperative the company always has the financial wherewithal to acquire more properties to grow the business and generate returns. This has led to some creative and far-reaching problem-solving as the national housing market has recovered since 2011. “About four years ago, we were in a strong growth phase when we realized that the ability to buy single-family homes at attractive prices and below replacement costs was becoming less viable each year as price appreciation recovered from the housing crisis in 2008,” Singelyn recalled. “We realized we had to make sure we had adequate channels of growth in our future, and that meant multiple points of access to capital.” The company immediately began cultivating and refining three channels to capital and acquisition: buying existing homes (the “traditional channel”), acquiring brand new homes from national builders, and developing new neighborhoods via the burgeoning build-to-rent model. “We started testing the build-to-rent concept wherein we would acquire land, work with our own development team, and build homes specifically for rental,” Singelyn explained. Although the term “build-to-rent” is ubiquitous today, at the time American Homes 4 Rent was far ahead of the curve. The company’s rental homes are also a far cry from other new builds when it comes to bringing value to owners and residents because they are built with preventative maintenance and longevity in mind (see sidebar). “These are higher entry-level homes than you will see if you buy conventional new construction,” Singelyn said. “We use materials that create a better maintenance experience for ourselves in the long term, that are better for the resident because they are cleaner and more visually appealing, and that are better for the environment because they do not have to be replaced as often, if at all.” Build-to-rent strategies have another advantage when deployed en masse in the manner in which American Homes 4 Rent has done: They offer dramatic advantages associated with efficiencies of scale. The company often builds 50 or 100 contiguous homes in the same neighborhood, which enables residents to enjoy many of the amenities that would normally come

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