Progress Residential
Partnership, Data & Technology Combine for SFR Success
By Carole VanSickle Ellis
Ask Progress Residential CEO Adolfo Villagomez about the “secret” to the company’s exponential growth, and his answer will be simple: “When customers like your product, they buy more of it, and that helps you drive growth.” Then, he will almost certainly add, “You cannot do these things by yourself.”
The answer sums up, in fewer than two dozen words, Villagomez’s approach to the industry of single-family rental (SFR) housing in the United States today, and it also reflects Progress Residential’s longstanding focus on delivering, to residents and renters, one of the most foundational products in American culture: “a place to call home.”
In an effort to make rental homes more homelike, Progress Residential has broken a number of barriers conventional to rental properties. One of the most significant concessions is the company’s nearly universal “Pets Welcome” policy that is bound by very few exceptions other than those imposed by local homeowners’ associations (HOAs). As the company website states, “From pit bulls to Pekinese, your furry family members are welcome here.”
Given that 90 million American households reported owning “at least one pet” in early 2022, the policy opens the doors of Progress Residential’s roughly 90,000 homes in 30 U.S. markets to many renters who otherwise might have struggled to obtain SFR housing without abandoning their furry friends.
Historically, landlords have often been reluctant to permit pets on their properties because animals — especially those with fur, claws, and fangs — tend to exacerbate the element of “wear and tear” on property values. However, Villagomez said, both company employees and customers “love” the policy and are excited about it.
That excitement, he explained, plays a key role in the overall success and growth of Progress Residential.
“We operate with the resident in mind at all times,” Villagomez explained. “When you combine empowered employees taking the best possible care of residents with modern data and technology, you create amazing customer experiences. This is what is driving the success of the Progress Residential portfolio.”
Dave Feldman, executive vice president of real estate and strategic operations, added, “Our differentiated approach to curating portfolios for investors while also providing residents with access to quality housing options is what enables us to scale the way we have and serve our customers as effectively as we have.”
When Feldman joined Progress Residential in 2014, the company had fewer than 10,000 houses and was operating in just a few markets. Founder Don Mullen had a vision, however, and he was determined to scale the company. Feldman was part of that plan to scale and has remained with the company and focused on the vision ever since.
“I have spent the last 20 years in various roles in real estate, from investments to national operations, leveraging data, analytics, and technology to inform strategy and drive consistent execution,” Feldman said proudly. “For the last eight years, I have been on that journey with Progress through my involvement with national operations, real estate investment management, and creating strategic capabilities that optimize our ability to thoughtfully invest capital on behalf of our investors and serve our residents.”
Leveraging Data & Technology on Both Sides of the Equation
As a privately owned, SFR home company serving eight times the number of households today as it served when Feldman joined the team in 2014, Progress Residential is one of the largest rental-home providers in the United States. Scaling operations as the company continues to grow is vital on both sides of the equation: Residents need to be able to rely on the company to provide reliable, positive management experiences while investors in the company naturally expect positive returns and growth into new markets and sectors. The key to achieving this balance, Feldman said, is making sure that the right parties are involved in the care and consideration applied to strategic and key tactical decisions.
“Our acquisitions efforts span three different channels,” he explained. “We invest in homes on a one-by-one basis primarily through the MLS; we partner with developers and homebuilders on new-construction homes and dedicated rental communities, and we acquire larger portfolios of stabilized and unstabilized houses from short-term owners and smaller-scale owners of the asset class.”
This broad spectrum has enabled Progress Residential to offer not only a vast array of SFR assets to residents but also to provide investors with a diversified approach to this type of rental asset, Feldman added. “We have the ability to acquire through a variety of channels, create value for investors, and provide access to quality housing options for our residents,” he concluded.
Such a large, diverse portfolio requires specialized management, Villagomez chimed in. “One of our key differentiators is our use of technology empowered by data,” he said, noting that the company could not continue to grow and scale at the current pace without constantly applying the information it gleans from its own data to “drive profitable growth and improve the customer experience.”
Investing in Affordable Housing, Access & Action
Recently, the company launched a new set of programs and initiatives intended to evaluate and optimize what Villagomez refers to as “the leasing and living experience.” This means Progress Residential is “looking into our service/maintenance approach, our customer operations, and value-added services for residents,” he explained. Progress Residential recently launched flexible security deposits in some markets and, perhaps most exciting, has begun “making investments into affordable housing as a business driver.”
“This is something I’m particularly proud of because it is a situation in which we learn of a need, partner with the appropriate entities in a city, and help people find homes that are safe, comfortable, and affordable,” Villagomez said.
Recently, Progress Residential partnered with the mayor’s office in Atlanta, Georgia, as well as several nonprofit organizations serving the area to help relocate a community in dire need. Many of the households living in the unhealthy multifamily apartment complex of Forest Cove needed three- or four-bedroom homes in order to comfortably house all household members, a difficult “ask” financially when moving from multifamily to single-family assets.
Progress Residential ultimately helped place multiple families with unique needs. Although the apartments had been condemned in late 2021, residents had struggled to find places to live that were affordable and large enough to accommodate their families. One household that ultimately relocated to a Progress Residential home included a parent who needed a one-story, accessible home that would accommodate a child with disabilities. Another opted for a property close to family, a move that dramatically increased her support system for the future.
At the end of October 2022, Atlanta mayor Andre Dickens spoke about the endeavor, which ultimately relocated 800 residents out of an apartment complex infested with rats and roaches and beleaguered by ongoing violence, including multiple shootings over the previous summer that injured, among others, a 13-year-old resident.
“800 lives have been changed; they’re in safe and dry, rat-free environments, trash- and debris-free environments,” Dickens said.
“Our dedicated people in affordable housing have developed relationships and made connections that enabled us to execute when the team in Atlanta saw a need to make something happen,” Villagomez said.
Feldman added, “What we have done differently in this space and to the benefit of our customers, collectively, is that we have assembled a professionally diverse management team
and organization.”
He explained that Progress Residential prioritizes bringing in experts who can “enrich” the team’s experience thanks to different professional backgrounds, including quick-service restaurant management and manufacturing.
“If you really think about our business, it is a data business, a technology business, a logistics business,” he said. “A number of the challenges we face today and will face tomorrow transcend industry boundaries, so we have hired people at the executive level and throughout the organization who recognize what good looks like within these different veins.”
At present, Progress Residential is focusing its affordable housing efforts in a few key markets in order to build the relationships necessary to implement lasting changes. “We want to partner with local authorities that share our ambition, and we also have to be sure we have brought in the right resources – and a lot of them,” Villagomez explained. “Rather than going shallow [in a lot of markets all at once], we want to go deep in a few markets to start. Then, we will begin the process of strategically evaluating what markets can use us.” Ultimately, he said, affordable housing is “not just something we happen to do, it is something we are committed to that is part of our growth strategy.”
Celebrating Fair Housing & Prioritizing Residents
Another “growth strategy” that has benefitted Progress Residential over the years is what the company terms a “celebration” of opportunities to serve resident needs. Again, in this arena, Feldman and Villagomez cite the availability of high volumes of data about the needs and use patterns of Progress Residential customers as a key component of successfully implementing this type of leasing and living experience. That caliber of treatment extends to how quickly maintenance is handled and how certain specialists are brought “in-house.”
“There are a lot of discussions in this industry about the number of employees you ultimately should have ‘per home’ or per household, etc.,” Villagomez said. “One of the long conversations we had about this topic at Progress Residential directly led to the hiring of a lot more service technicians in order to get most work orders fulfilled in 24 hours or less.” Villagomez explained that when demand for specialized service provider spikes, the company has brought more technicians in-house in order to lower costs for the company and expedite completion times for residents.
“There are certainly financial aspects that have to be worked out when this is your response, but at the end of the day, it was a win-win for our investors and our residents,” he concluded, adding that even more maintenance will be in-sourced in the near future.
“We are always looking for partnership,” Villagomez said proudly. “We have partnership with our investors, many of whom have been partners with us for years because our motivations and interests are aligned. We have partnership with our residents because our focus is having impact above and beyond just generating a return.”
Feldman added, “In 2021, we expanded into about half a dozen markets. I would be surprised if we did not expand into another dozen or so over the next 12 to 24 months. Our technology is an enabler, and our data points us in the right direction as we expand and evolve in high-growth markets.”
Villagomez concluded, “There will always be people looking to rent a house, and most of us have the aspiration to live in a single-family home. As long as there is this need, Progress Residential will continue to invest and be ready to serve the individuals and families who want to live in our homes by supporting housing access, affordability, and our local communities.
Sidebar 1
How Big Can This Be?
Serving the Underserved in the SFR Space
When Dave Feldman, executive vice president of real estate and strategic operations at Progress Residential, started out in real estate in the early 2000s, single-family rental investing at an institutional level was nearly nonexistent. Two decades later, advancements in cloud-based systems and other forms of technology have enabled efficient operations, and in turn, provided customers with an experience they had been accustomed to in the professionally managed multifamily space.
With between 15 and 20 million single-family rental assets existing in the market today and a projected need for at least 5.5 million more in order to “close the housing gap,” as Pew Trust and the National Association of Realtors described the issue in a report on national housing shortages in early September 2022, Feldman said the opportunity to grow and expand access to quality, affordable rental housing remains highly compelling.
“Institutional managers own and operate approximately 3% of the existing SFR inventory, so there is a massive segment of the market that is underserved from a professional management perspective,” he said. “This is not just about growing investors’ exposure to the business; it is also about providing a large and growing customer segment with a professional management and service experience. There is a huge runway for us to continue growing our platform and meaningfully serving the households that choose or need to rent as opposed to owning a home.”
Of course, Progress Residential’s dedication to the principles expressed above is directly tied to its success in the marketplace, as many long-time investors will testify. “At a high level, our stakeholders include public and private pensions, insurance companies, and other global real estate investors,” observed Feldman. “This asset class fits really well within that constituent’s mandate and where they choose to sit on the risk/return curve.”
Sidebar 2
Progress Residential by the Numbers
90,000 — Progress Residential’s portfolio currently holds approximately 90,000 SFR homes
30 — Number of markets in which Progress Residential owns assets
10 — Number of years Progress Residential has been in business
0 — numbers of breeds of dogs or cats excluded by Progress Residential pet policies
Progress Residential Markets
This market list was complete at time of writing, but Progress Residential’s active growth initiatives mean new markets are always in the works.
» Atlanta, GA
» Austin, TX
» Charleston, SC
» Charlotte, NC
» Columbia, SC
» Columbus, OH
» Dallas, TX
» Denver, CO
» El Paso, TX
» Greensboro, NC
» Greenville, NC
» Hilton Head, SC
» Houston, TX
» Indianapolis, IN
» Jacksonville, FL
» Las Vegas, NV
» Memphis, TN
» Miami, FL
» Nashville, TN
» New Jersey
» Orlando, FL
» Phoenix, AZ
» Raleigh, NC
» Salt Lake City, UT
» San Antonio, TX
» Sarasota, FL
» Savannah, GA
» Spartanburg, SC
