Leading the Way in the Leasing Lifestyle
Invitation Homes Continues to Leverage the Shift in American Thinking on Housing
by Carole VanSickle Ellis
Invitation Homes has an 80,000-home inventory spread across 16 U.S. markets, has been classified as an “all-weather” asset by market analysts at Seeking Alpha, and serves the increasingly large population of Americans who define “living life on their own terms,” in part, as participating in a leasing lifestyle. The company is weathering the COVID-19 pandemic and associated investor fears about rent collections and changing residential leasing policies with aplomb and, yes, profitability. And yet, the first thing CEO Dallas Tanner mentions in his interview for this story is how excited he is about the new smart-home technology features the company is making available to residents.
Dallas Tanner, CEO
“It’s one of the many innovations Invitation Homes is making to improve the experience of its customers during a time when Americans are increasingly seeking a flexible, easy lifestyle through renting versus owning. We are offering a product that centers around security and wellbeing,” Tanner said. Then, without further delay, he dove right into the opportunities Invitation Homes offers the roughly 34 percent of the renting population in the United States that currently rents a single-family home.
“The market for single-family rentals has always existed, but no one has ever done it really well at the scale we are striving for,” Tanner elaborated. “For us, the focus is always, ‘How can we do this better? How can we push the opportunities and limits of what has traditionally defined leasing to create a lifestyle that people genuinely want to choose?’”
Working Hard to Understand the Consumer
When you think of Invitation Homes, you probably think “Wall Street real estate”. After all, the company is a REIT (real estate investment trust) that first emerged on the scene in 2012 after Tanner’s first investment company joined forces with The Blackstone Group. In that first year alone, the company purchased more than a quarter of the properties it holds today. In 2017, the company went public in the second-largest initial public offering (IPO) of a REIT in history. Today, it is considered one of the best all-weather stocks in the real estate sector thanks to an innovative blend of intensely focused customer service, strong operational procedures, a top-notch portfolio, and a committed team of professionals. The success of this integrated approach is borne out in the company’s quarterly metrics; despite the emergence of the global COVID-19 pandemic in March of last year, by August Bloomberg TV reported Invitation Homes’ rental revenue was performing around historic norms. At a time when many of the nation’s landlords and tenants were scrambling to keep afloat, Invitation Homes residents were, in large part, staying ahead of the game.
Tanner was pleased that demand for his product was stronger than ever and that his residents were able to pay their rents, of course, but he was more interested in the why and how. True to form for Invitation Homes executives, he did not let the opportunity to conduct more customer satisfaction surveys and transactional interviews go to waste. In fact, by the beginning of August, he was ready to report on his findings and take the next steps in continuing to improve residents’ “leasing lifestyle”.
“We have begun surveying residents…to learn more about how the pandemic may be influencing things about their housing decisions,” he told Bloomberg at the time, noting that about a third of move-ins said they were leaving dense urban areas to move into Invitation Homes’ largely suburban territories, and another third said that COVID-19 had “increased their desire to live in a single-family home versus an apartment or town home”.
Paul Mauk, vice president of portfolio development at the company, was a founding member of the COVID-19 task force that Invitation Homes put together to respond to the crisis and to help residents and associates navigate the constantly changing health environment that began in early 2020.
“We are a very cross-functional group,” Mauk recalled. “Early on, we met every day to really focus on what our residents and associates needed from us during that difficult time, and we still regularly touch base now to make sure we’re adjusting as the pandemic continues. It has been rewarding to see how our management team is laser-focused on the safety and well-being of our residents and our associates.”
Charles Young 
John Gibson 
Paul Mauk
Because Mauk’s primary role within the company is to continue to propel the customer experience forward, his experience on the COVID task force also directly correlates to what Invitation Homes refers to as “the leasing lifestyle”. Despite relatively small market share (the Invitation Homes portfolio of roughly 80,000 properties equates to about one half of one percent of all single-family rental homes nationally), the company is significantly larger than other companies in the industry. Tanner and his team believe this means that the customer experience should always scale upward, and Mauk is a key player in that process.
“We are always discussing how we can provide additional services to our residents thanks to our scale and massive capabilities that otherwise might not be as accessible or as affordable to a consumer,” Mauk said. “Our daily process involves figuring out the best way to enhance the residential experience for our residents. One example is smart-home technology that provides security for the property and the tenant and gives the resident the ability to remotely control their home temperature, door locks, etc.” The company also plans to begin offering a video doorbell component soon, and, in 2020, rolled out an air-filter delivery program in which each enrolled resident receives an air filter delivered to their home every 90 days.
“This program provides better air quality both in and outside the home, benefitting the environment,” Mauk said. Invitation Homes also is currently working on pest control and landscaping service packages. Mauk noted that during the past year, Invitation Homes has retained more than 80 percent of its existing residents, an indication that the amenities of the leasing lifestyle are proving attractive and, in industry parlance, “sticky”.
“We consider retention to be the ultimate scorecard of resident satisfaction,” Mauk said. “If 80 percent of residents decided to stay in the home when the time came to renew the lease, then that is an exceptionally good sign. We are immensely proud that overall resident satisfaction has actually improved during the pandemic timeframe, and we believe it is due to two things: our ‘genuine-care culture,’ which means we treat each resident and interaction with an eye toward being fast and friendly, doing the right thing, and solving the issue. Also, our work on identifying meaningful opportunities, big or small, to improve the resident experience.”
Rethinking Homeownership in 2021 and Beyond
A passion for growth is certainly a common denominator across the Invitation Homes executive team. That growth is not limited to literal geographic expansion, however. In fact, while everyone interviewed for this article expressed positive interest in growing the company portfolio as appropriate, the overarching interest among the company leadership ran more toward growing and improving customer experience.
John “Gibby” Gibson, executive vice president of portfolio management for Invitation Homes, explained. “We understand that our residents are where our business is anchored. Every conversation we have about corporate innovation or growth has to start with understanding what the impact and opportunity will be for our residents and associates.” Gibson, who joined the company in 2016 after spending 21 years with Goldman Sachs and its subsidiary, Archon Group, said he was immediately attracted to Invitation Homes because of the atmosphere of change and innovation that pervades the company.
“Our residents inform every aspect of our culture and our decision-making processes at Invitation Homes,” he said proudly. “Despite being a very large company with a significant asset base of more than $20 billion, this company still feels like an entrepreneurial, innovative shop.” Gibson prizes the hands-on, problem-solving approach that enabled Invitation Homes to find early and continued success in a tough real estate segment and that has, thus far, carried the company through the COVID-19 pandemic on surprisingly smooth waters.
“That is not to say that it hasn’t been hard, but it could have been so much worse for the company and for our residents,” Gibson said. “We are always trying to think like a small company, remain flexible like a new startup, and, of course, we retain all the institutional controls and behaviors demanded from a governance standpoint.” As the company moves forward in 2021 and beyond, Gibson predicted more and more Americans are likely to consider renting a home rather than buying in order to access the types of amenities, school systems, and locations that have emerged as most attractive in the COVID and post-COVID era. Invitation Homes is prepared to meet that need.
“Being people-focused helps us stay in contact, keep our pulse on the ground, and keep our eyes on what will make us better corporate citizens,” Gibson said. He observed that younger households are redefining the concept of “home” in a way that will likely change real estate trends and ownership patterns permanently.
“The ability to have space, to have a place that you can call your own home, is more important than ever, but the way we define whether we have achieved that is changing,” he said. “It no longer requires the resident to be asset-heavy and own a property that limits them from moving if and when necessary.” Invitation Homes closely monitors these changes and optimizes its offerings in areas where consumer trends indicate “households want to form,” Gibson explained, adding, “We want to create offerings where there are good jobs and schools and where the economy is growing.” Gibson credits the “constant feedback loop” from current, future, and even departing residents for much of the company’s success in selecting markets that meet resident needs and being able to grow responsibly and productively in those areas.
“The reality is that we are in a nascent industry in the very early innings,” Gibson said. “We have never, ever wavered from the fact that the rental business, that real estate, is local. That understanding and willingness to listen is the most critical asset in our business.”
Tanner agreed. “We work hard to understand what the residents in the communities where we are buying want. That way, when we acquire properties, we do things that not only lift our property values but lift the value of the neighborhoods around us as well.”
Sidebar 1:
How Invitation Homes Built a Better Customer Experience
Charles Young, executive vice president and chief operating officer of Invitation Homes, likes to keep things simple. “If we provide a great customer experience, our residents are going to stay longer. That is what our business is built on,” he said by way of introduction to his role at Invitation Homes. “Positive occupancy, rent growth, and operational efficiency will all follow.”
Young, who served as COO of Starwood Waypoint Homes from March 2015 until the company’s merger with Invitation Homes in November 2017, is a big fan of keeping things focused. “What we want to do in every aspect of our business is look at what will enhance the customer experience and make things easier and better for our residents,” he said. That constant refinement and improvement is what distinguishes what Invitation Homes refers to as “the leasing lifestyle,” in which renting a home instead of owning it is a deliberate, lifestyle-conscious decision, from the more traditional concept of renting, which simply involves paying rent while, at least in theory, trying to save up for a down payment.
“The decision to rent is and should be a very personal one,” Young said. “We want to create an environment where that decision becomes empowering.” He cited decisions that many households make when renting, such as the ability to access good school districts, safe neighborhoods, and growing communities, as drivers in the acquisition process at Invitation Homes. “It’s our responsibility to give our residents a healthy, affordable option where they don’t have to worry, can be near family if they want, and can experience the ease of use that comes with leasing,” he added. “If we do that, ultimately they are going to create a long-term home with us – and that’s good for everyone.”
Sidebar 2:
Markets
Invitation Homes currently operates in 16 markets in the United States. Those locations are:
- Atlanta, Georgia
- The Carolinas
- Chicago, Illinois
- Dallas, Texas
- Denver, Colorado
- Houston, Texas
- Jacksonville, Florida
- Minneapolis, Minnesota
- Northern California
- Orlando, Florida
- Phoenix, Arizona
- Seattle, Washington
- South Florida / Miami
- Las Vegas, Nevada
- Southern California
- Tampa, Florida
