The “End Hedge Fund Control of American Homes Act”

New Legislation Targets SFR Owners By David Howard In December, Senator Jeff Merkley (D-OR) and Representative Adam Smith (D-WA9) introduced the End Hedge Fund Control of American Homes Act, a bill targeting the legitimate development, investment, and ownership activities of America’s leading providers and builders of professionally-managed single-family rental homes and communities. By forcing any entity owning $50 million or more of single-family rental home assets to sell all properties over a 10-year period, this legislation will: »          reduce the availability of safe, quality, affordably priced housing for hundreds of thousands of renter households nationwide; »          prevent middle-class families from renting housing located in neighborhoods near quality schools, employment centers, and transportation corridors; »          disincentivize the building and development of new units of much-needed rental housing; »          stifle innovation and entrepreneurialism in America’s housing market. A Flawed Solution It is not hard to see the deep flaws in this bill. Besides upending America’s long commitment to the foundational principle of the right to own property, anyone who knows anything about housing surely knows the country is facing a crisis of underbuilding that has resulted in a supply deficit of between four and six million homes. And this bill makes that crisis worse. At a time when housing affordability and supply are at historic lows, we need serious policy solutions and proposals to address this long-standing, and continuing problem. We also know that government policies alone will not solve this crisis. We need to spur the production of all types of housing — owner-occupied and rental – by enabling more private market investment, innovation, and expertise. The Merkley/Smith bill will only limit the availability of affordably priced single-family rental housing, ensuring sought-after neighborhoods remain off limits to families for no other reason than they choose to rent. In their support of the bill, Sen. Merkley and Rep. Smith rely on out of context and unsubstantiated claims about the single-family rental home market and the role of housing providers within that market. First, it is blatantly inaccurate to refer to the vast majority of single-family rental home providers as “hedge funds.” They are not. The market is comprised of a wide diversity of owners and builders, including publicly traded companies, family businesses, and most significantly, individuals. Many of these owners and builders are integral parts of local housing ecosystems that make neighborhoods better places. In a study of rental housing providers published in December 2018, Fannie Mae reported “institutional investors” own just 1% of the single-family rental homes in the United States, compared to “small” and “very small” investors who own 95%. Second, the bill defines “hedge funds” as any entity with $50 million or more of assets. According to the National Association of Realtors, the median price of an existing home in the United States is $391,800. This means, anyone owning just 128 median-priced homes would be forced out of business by this bill. Third, the implication that single-family rental home providers — of any size — have an ability to “control” housing markets is completely unfounded. A “fact sheet” for the bill states large providers own 574,000 homes, without providing any context for understanding the impact on America’s housing market. The 574,000 homes owned by large providers represent less than 0.4% of the 145 million housing units in the country. This means, more than 99.6% of the housing in the United States is owned by someone other than the housing providers targeted by the Merkley/Smith bill. As for the country’s rental housing market, large providers of single-family rental homes own just 1.3% of the 44 million units. Fourth, the claim that providers of single-family rental homes are somehow negatively impacting homeownership is not supported by an extensive collection of data, most notably, the Census Bureau’s reporting of the U.S. national homeownership rate, which is higher today (66%) than five years ago (64.4%). Additionally, Census Bureau data show the amount of owner-occupied housing in the U.S. has increased by more than 10% (nearly 8 million units) over the last five years, while the amount of rental housing has increased by just 2.6% (1.1 million units). In a report published in July 2023, the Census Bureau revealed homeownership rates had increased across all U.S. regions and among all racial/ethnic groups between the years 2019 and 2022. For local context, homeownership rates are also higher today than five years ago in the home states of both Sen. Merkley (OR) and Rep. Smith (WA), and in each state’s largest MSAs (Portland and Seattle).Lastly, an NRHC report published in February 2023 showed the share of the single-family home market accounted for by rental homes has fallen 1.4% over the last decade. Americans Need More Options — Not Fewer The simple fact is, America needs more housing — of all kinds, owner-occupied and rental — to meet the needs of both homeowners and renters. With decades-high mortgage rates and rising home prices, Americans need more options to access quality, affordably-priced housing, not fewer. Research from housing industry consultant, John Burns Research & Consulting has shown the monthly cost of renting a single-family home is $1,000 less than the monthly cost of ownership. For many families, the monthly savings of renting a single-family home has a meaningful impact on a range of quality-of-life issues and provides for opportunities to live in neighborhoods and communities that otherwise might not be available. Providers of single-family rental homes are working diligently to address the supply challenges confronting today’s housing market. Over the past year, NRHC members have invested over $2 billion in home upgrades, renovations, and rehabilitations. Providers are investing in communities and neighborhoods and will continue to enhance and expand the diversity of housing opportunities available for families considering the advantages of leasing a single-family home. The bottom line is this: working families deserve access to great homes in great neighborhoods. No matter where Americans are in life, they should have a range of options to meet their individual housing circumstances. This is what the Merkley/Smith bill’s flawed

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IMN Single Family Rental Industry Awards

2023 Winners IMN hosted the 2nd Annual SFR Industry Awards on December 3rd, 2023, immediately preceding their 11th Annual Single Family Rental (West) Forum. The Awards Ceremony celebrated and honored the excellence of the SFR industry. Here are the Winners of the 2023 SFR Industry Awards! Congratulations to each and every one of you. Brokerage of the Year (Debt) Northmarq Brokerage of the Year (Investment Sales) Berkadia BTR Deal of the Year Wolfson Development Law Firm of the Year Alston & Bird Land Deal of the Year WAY Capital & LaTerra Development AEC (Architect, Engineer & Construction) Service of the Year Bowman Consulting Group Fix & Flip Lender of the Year Roc Capital BTR/Construction Lender of the Year Techo Funding Lender of the Year (Portfolios) MetLife Investment Management Private Equity/Joint Venture Deal or Partnership of the Year MetLife Investment Management SFR Securitization of the Year CoreVest Ratings Agency of the Year KBRA PropTech Financing of the Year Lessen SFR/BTR Operator of the Year (National) Lafayette RE SFR/BTR Operator of the Year (Regional) Quinn Residences Best Marketing/Social Media Campaign RCN Capital ESG Initiative of the Year Man Global Private Markets Excellence in Diversity Berkadia Charitable Initiative of the Year FirstKey Homes Contractor/Rehab Company of the Year RM Interiors Data Provider of the Year John Burns Research & Consulting Landlord/Owner Technology of the Year PetScreening Property Management Company of the Year FirstKey Homes SFR Online Marketplace of the Year Avenue One Tenant-facing Technology of the Year Rently AI Application of the Year Ownwell Minority Operator of the Year Diego Sanchez — FirstKey Homes Woman Operator of the Year Jennifer DeSario — FirstKey Homes CEO of the Year Thibault Adrien — Lafayette RE Acquisitions Officer of the Year Dave Feldman — Progress Residential

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Q&A with Robert Lee, CEO, Sylvan Road

A Conversation About the Real Estate Industry and the Aging Housing Stock Robert Lee is the Chief Executive Officer and Co-Founder of Sylvan Road and has been involved in all phases of the firm’s development since its inception in 2012. Among other things, Rob’s role is to curate the firm’s vision, devise a blueprint for its execution and to manage the daily operational direction of the firm. Rob was part of the original team where he played a pivotal role in helping to pioneer the institutional asset class which has become single family rental. Rob is focused on helping investors and partners achieve their vision by orienting them towards action. REI INK sat down with Rob to discuss the real estate investment industry and specifically about the country’s “aging” housing stock. Rob, can you give a general overview of Sylvan Road? Sylvan Road is an investment firm focused exclusively on single family real estate. We are a technology-enabled, data-centric, idea-driven firm that utilizes state-of-the-art proprietary analytics on our platform. We were one of the earliest pioneers in the sector and currently have over $2.3 billion in assets under management and through our operating affiliates, we oversee the complete management life cycle of single-family investments. The single-family rental industry is an essential part of America’s housing marketplace, and Sylvan Road is proud to be a part of this vital and growing community. We provide affordably priced, top-quality homes in desirable neighborhoods that serve the distinct and varying lifestyles of our residents. What is your approach to real estate management? We maintain a diverse portfolio of homes with a wide geographic footprint and take a vertically integrated approach to real estate management, controlling all aspects of the investment life cycle from acquisition to disposition. With our nation’s housing stock aging, one niche where we have particular experience is ‘vintage’ homes. These are homes that were generally built in the 1950s and 1960s. What makes these homes so interesting? Well, they tend to be unique, they have character and charm, and they are decidedly not “cookie cutter” homes. They were built to last, and many aspects of their construction cannot be replicated today. The old adage: “They don’t build ‘em like they used to” is decidedly true when it comes to these homes. They were built with wood made from old-growth trees, so they are more resistant to rot and warping. The walls are often built with plaster and lathe, making them structurally stronger than the drywall construction of newer homes. In addition, these homes are typically located in well-established communities, with mature trees, large backyards, close to employment, good schools, and town amenities. They are in walkable areas. Finally, you just cannot replicate the charm and nostalgia or some of the design elements found in these homes like authentic stained-glass, original crown molding and real, hardwood floors. However, this aging cohort of our housing stock will become structurally obsolete unless work is done to bring it up to today’s standards including energy efficiency and other systems improvements. This refurbishment of our nation’s older housing stock not only provides quality living for residents, but also delivers a societal benefit that cannot be overstated. What about the problems facing the industry today, such as the current housing shortage? It is no secret that there is a severe housing shortage in this country. More than 3.8 million housing units are needed today, and this number is growing every year. In many states across the country, the challenge facing the housing market is simple: there is not enough supply. The supply of housing in the U.S. has not kept pace with demand — for years. This presents a problem that can only be solved by providing a diversity of housing types, which includes renovated homes. We simply have not and cannot build enough housing to keep pace with the demand. In fact, there is greater demand for housing in the United States today than there has been in decades. We need to expand our supply of homes, and to invest in our aging housing stock. How does Sylvan Road and “vintage” homes come into play with the housing shortage? Currently, the average age of homes in the US exceeds 40 years, the oldest it has ever been. The government estimates that the nation’s housing stock needs repairs exceeding $149 billion. Sylvan Road is addressing this need as we commit to the communities where we invest, build, and renovate. We are providing families with more options for stabilized, quality and affordably priced housing than ever before. At a time where housing markets across the country are challenged by ongoing supply constraints and affordability concerns, we are working to enhance and expand the diversity of available housing opportunities. We believe that every person, no matter their income, background, or profession, deserves access to a quality home in a quality neighborhood. Our interest and investment in ‘vintage’ homes directly impacts this equation. Do you have any final words on Sylvan Road’s contributions to the real estate industry? We keep these vintage homes from obsolescence. We increase the nation’s inventory of available homes. We create a greater range of choices for housing consumers. We provide high quality homes in desirable neighborhoods to families who desperately need them. In the end, we directly contribute to the vitality and vibrancy of neighborhoods and communities. That is a total win in our book. Sylvan Road manages capital for blue chip institutions, insurance companies, credit and real estate funds, asset managers and family offices. They build performance-focused investment portfolios through trusted, cooperative institutional partnerships. Sylvan Road is proud to be the industry standard bearer for single family real estate serving this$4 trillion asset sector. Discover more about Sylvan Road at https://sylvanroad.com/

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From Successful Attorney to Real Estate Entrepreneur

Find a Mentor and Get to Work Chandra Quaye is an independent business owner with HomeVestors® of America, Inc. in the Fayetteville, North Carolina, market. She started her HomeVestors business, Red Letter LLC, in 2017 after 16 years in the corporate world, both as an attorney and as a senior executive. Life Before HomeVestors Chandra graduated from Cornell University in 1998 and Duke Law School in 2001. She practiced law for nearly 10 years before transitioning into higher education—starting out as a faculty member at a private university—quickly advancing to Dean, Associate Provost, and finally Senior Vice Provost for Student Affairs and Academic Services. In 2017, Chandra realized she needed a change. “I hit a growth ceiling at my job and that killed my passion. Plus, it required a lot of travel that took me away from my kids. I wanted challenging, fulfilling work with unlimited growth potential. I also wanted to build generational wealth instead of having a set annual salary,” explained Chandra. Becoming a HomeVestors Independent Business Owner “I researched the HomeVestors opportunity years earlier but, I didn’t fully understand the possibilities,” said Chandra. “I initially started a property management firm as my venture into real estate. One of my property management clients was a HomeVestors business owner. Seeing his deals made me look at the opportunity more seriously.” Chandra bought her HomeVestors franchise without any real estate investing experience. Being a novice, she followed the HomeVestors program from day one and took advantage of everything the program had to offer. Her primary focus was on building a rental portfolio while also doing some fix-and-flips. “December, 2017 was my first month of operation. I got my first house under contract that same month. By the end of 2018, I had bought 15 homes,’ said Chandra. “I’ve increased each year except 2021 when I bought 14. In 2023, I bought 28 homes.” Chandra said that her initial goal was to have a 100-home rental portfolio, but that goal has quickly expanded. “The Fayetteville rental market is hot and home prices keep rising,” she added. “My philosophy is to rent for appreciation and equity rather than only cash flow.” Chandra explained that her work helps neighborhoods by removing dilapidation from the area, and it also helps prospective homebuyers and tenants by adding freshly restored homes to market inventory. She also proudly stated that she very much enjoys helping people who are in difficult and “ugly” situations. Chandra’s Crystal Ball When asked what 2024 has in store for her business, Chandra was very optimistic. “Home prices should continue to grow because more millennials are getting involved, inflation is tampering down, and interest rates are stabilizing. Meanwhile, housing supply remains extremely low. I only see upside in my business and my plan is to keep growing my rental portfolio.” While HomeVestors is still Chandra’s primary focus, she also started Quaye Law Firm, PLLC which helps other franchisees and investors with their real estate transactions, including contract review, title examination and document preparation. “HomeVestors is a family. We are not competitors,” Chandra said. “Everybody works together. The best decision I ever made was buying a HomeVestors franchise.” Advice from an Expert •          Buy a HomeVestors franchise. •          Leverage mentors and resources. •          Hold yourself accountable to clear goals for your business. Homevestors What exactly does it mean to be a HomeVestors® business owner? Owning a real estate business is life changing and naturally comes with risks! When you become a HomeVestors business owner, you get immediate access to motivated seller leads, financing resources for qualifying purchases and repairs, one-on-one coaching with your local Development Agent, proprietary software for analyzing properties and deals, and access to a nationwide network of coaches and peers. Your house-buying business is yours and you run it as your own venture with a focus toward your individual business goals. If you are interested in a franchise, call 866-249-6932, email Sales@homevestorsfranchise.com or visit www.homevestorsfranchise.com. Each franchise office is independently owned and operated.

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REI INK at IMN West

Taste Tester Investor Another great culinary networking event with our wonderful clients and supporters. Co-Hosted by RCN Capital & REI INK Sponsored by The Home Depot, Dwellsy and BCHH

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Home Flipping Activity Keeps Falling

Raw Flipping Profits Also Up, to High Point Since Middle of 2022 By The ATTOM Team ATTOM, a leading curator of land, property, and real estate data, released its third-quarter 2023 U.S. Home Flipping Report showing that 72,543 single-family homes and condominiums in the United States were flipped in the third quarter. Those transactions represented 7.2%, or one of every 14 home sales nationwide, during the months running from July through September of 2023. The latest portion was down from 7.9% of all home sales in the U.S. during the second quarter of 2023 and from 7.7% in the third quarter of last year. While the flipping rate remained historically high, it dropped for the second straight quarter, to the lowest point in two years. But even as flipping rates declined, the latest analysis also revealed that fortunes continued improving for home flippers during the third quarter in the form of rising profits. Investor returns increased for the third quarter in a row, rebounding from a slump that had slashed profit margins by nearly two-thirds from early-2021 to late-2022. Margins, along with raw profits, rose to the highest levels since the middle of last year. The typical third-quarter profit margin of 29.8% nationwide — based on the difference between the median purchase and median resale price for home flips — remained far below peaks hit in 2021. But it was up from 29% in the second quarter of 2023 and up seven percentage points from a low of 22.4% in the fourth quarter of last year. Raw profits on typical flips around the country, meanwhile, increased to $70,000. That remained well down from a high of $110,000 reached in 2021. But it was up slightly from the second quarter of 2023 and was $15,000 more than last year’s low point. “The comeback for the home-flipping industry is looking more like a real trend than a temporary break in what had been a pretty bleak couple of years,” said Rob Barber, CEO for ATTOM. “For sure, investment returns still aren’t anywhere close to where they were a couple of years ago. The latest nationwide profit margin also remains barely within the spread that covers the usual holding costs on flips, with wide variations around the country. Nevertheless, home flippers continue to head back in the right direction.” Profits and profit margins again turned upward in the third quarter of 2023 as investors were able to benefit from shifts in prices that went in their favor from the time when they were buying their properties to the point at which they sold them. Specifically, the typical resale price on flipped homes decreased to $305,000 in the third quarter, a 1.5% decline from the second quarter of 2023. But that drop-off was not as much as a 2.1% dip in median prices that recent home flippers were commonly seeing when they were buying their properties. The smaller quarterly decline in resale prices led to the improvement in profits and profit margins. Home Flipping Rates Tick Downward in Three-Quarters of Nation Home flips as a portion of all home sales decreased from the second quarter of 2023 to the third quarter of 2023 in 136 of the 183 metropolitan statistical areas around the U.S. with enough data to analyze (74%). Most of the declines were by less than two percentage points. Among those metros, the largest flipping rates during the third quarter of 2023 were in:  »         Macon, GA (flips comprised 16.1% of all home sales)  »         Salisbury, MD (14.1%)  »         Spartanburg, SC (13.3%)  »         Atlanta, GA (13.2%)  »         Fayetteville, NC (12.8%) Aside from Atlanta, the largest flipping rates among metro areas with a population of more than 1 million were in:  »         Memphis, TN (12.5%)  »         Jacksonville, FL (10.8%)  »         Phoenix, AZ (10.4%)  »         Cincinnati, OH (10.2%) The smallest home-flipping rates among metro areas analyzed in the third quarter were in:  »         Seattle, WA (3.8%)  »         Madison, WI (3.9%)  »         Honolulu, HI (3.9%)  »         Bridgeport, CT (4%)  »         Lansing, MI (4.1%) Regionally, the highest third-quarter flipping rate was in the:  »         South (9.1%)  »         West (8.1%)  »         Midwest (6.5%)  »         Northeast (5.2%). Typical Home Flipping Returns Up in Half of U.S. The median $305,000 resale price of homes flipped nationwide in the third quarter of 2023 generated a gross profit of $70,000 above the median investor purchase price of $235,000. That resulted in a typical 29.8% profit margin in the third quarter of 2023, up from 29% the second quarter of this year and 27% in the third quarter of last year (as well the recent low point of 22.4% in the fourth quarter of 2022). But the latest nationwide figure still remained far beneath the 60.8% level in the second quarter of 2021. Profit margins went up from the second to the third quarter in 93 of the 183 metro areas analyzed (51%) and were up annually in 111 of those markets, or 61%. The biggest year-over-year increases in typical profit margins during the third quarter came in:  »         Akron, OH (ROI up from 50% in the third quarter of 2022 to 114.1% in the third quarter of 2023)  »         Flint, MI (up from 61.6% to 113.8%)  »         Canton, OH (up from 17.8% to 69.6%)  »         Augusta, GA (up from 44.8% to 93.5%)  »         York, PA (up from 61.5% to 107.5%) The biggest annual increases in typical profit margins among metro areas with a population of at least 1 million were in:  »         Birmingham, AL (ROI up from 35.4% in the third quarter of 2022 to 71.9% in the third quarter of 2023)  »         Buffalo, NY (up from 75.6% to 109.7%)  »         Cleveland, OH (up from 35.8% to 67%)  »         Cincinnati, OH (up from 33.5% to 55.3%)  »         Tulsa, OK (up from 32.3% to 53.8%) The recent gains resulted in typical profit margins of below 30% in just 68, or about a third, of the 183 metros with enough data to analyze in the third quarter of 2023. That was far

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