REI INK

Accessory Dwelling Units

New Life & New Challenges in an American Tradition By Carole VanSickle Ellis If you have read the Little House on the Prairie books by American pioneer girl Laura Ingalls Wilder, then you may remember the book in which the family lives in a dugout underneath a hillside next to a creek while they build a farmhouse in which to live permanently. Wilder describes this time spent “on the banks of Plum Creek” (also the name of the fourth book in the Little House series) as a largely idyllic time in her childhood, but living underground in a home where a cow could put a hoof through the roof at any time could not have been entirely pleasant. However, it gave the Ingalls the home base they needed while they built a larger, more permanent home and, in the process, Laura participated in the long-practiced model of leveraging accessory dwelling units (ADUs) in order to improve housing affordability and access. “ADUs are an American tradition,” observed AARP “Livable Communities” authors in 2019 as part of an initiative to familiarize the Gen X and junior Boomer populations with the concept of possibly living in a “granny unit” once they hit retirement age. “[For centuries], people with wealth and acreage regularly populated their lands with secondary mansions and ancillary buildings independent of the main estate,” the report said. Today, ADUs are, once again, an indicator that a property owner is working on building wealth for the future, often by renting out the smaller property or even subdividing it off and selling it. However, these small housing units have become much more than just an outward sign of affluence and prosperity. Today’s ADUs and their associated local legislation can indicate the presence of huge potential returns for real estate investors or, conversely, enormous potential headaches for investors and their neighbors alike. Opportunities & Challenges “The ADU space provides both opportunities and challenges,” said Michelle R. Rodriguez, a partner with the California branch of legal firm Wright, Finlay & Zak who specializes in Compliance, Licensing, and Regulatory issues. Rodriguez is a licensed attorney, a licensed real estate broker, and a member of the board of directors for the California Mortgage Association. She continued, “For investors, when you are considering buying a property, you need to be aware of all the possibilities around ADUs. How many units are there? How many units could there be? How will the deal pencil out? Knowing what the rules are gives you a leg up and differentiates you from the hundreds of other people and entities in the space.” California, where Rodriguez is based, has one of the most proactive state policies on these little dwellings, which many researchers believe are the key to solving the affordable housing crisis without losing the attractive elements of single-family residential communities. In California, a property may have as many as three ADUs on the property, and those units may be built and sold as condominiums instead of remaining with the “parent” property. New construction must go through an approval process and may be taxed at a state or municipal level, may have as many as three bedrooms (but no more than 1,200 square feet and less in some circumstances), and may have a height of 18 feet, or 25 feet if they are attached to a larger structure. The goal of these “relaxed” regulations, Rodriguez said, is to ameliorate the affordable housing problem in the Golden State. “There are certainly communities out there that either do not want ADUs or want to greatly restrict the number and type of ADUs they permit, and often these are the communities where there is a great need for affordable housing,” Rodriguez explained. “The state of California has stepped in with its new legislation in an effort to force municipalities to allow ADUs to a certain extent, such as setting a minimum allowable number of units on a property (3).” This means, at least in theory, that communities will not be able to prohibit property owners from building three ADUs on their properties assuming other building and inspection codes are met; some cities in California have elected to raise that number to five. “Offering a mix of housing types and sizes will always be a boon to affordable housing,” observed Karen Patten, principal of Atlanta, Georgia-based YIMBY (Yes In My Backyard) Consultants. “Here, ADUs are still very much in an experimental stage,” she continued, “so the impact is still to be determined.” In Georgia, some cities, such as Atlanta, and counties (roughly 10% of the 159 counties in the state) permit some closely regulated ADU construction. However, even in a municipal area, communities may have restrictions on who can inhabit an ADU (renter vs. non-paying or related resident) and how many ADUs may be constructed in a given area. At the state level, ADUs may be attached or detached and are permitted to take up no more than just under one-third of the backyard of the house, the only place ADU construction is permitted. Furthermore, the owners of the property must occupy either the main residence or the ADU. “I think they are more accepted in metro-area historic communities where you see a mix of single-family, small multifamily, and commercial together and well-integrated,” Patten said. “I think it works best there [and] they are less likely to face ‘NIMBYs’ [Not In My Backyard].” “So many people are against adding units; you always will have the NIMBYs,” agreed Kristin Weekley, a Boston-based agent and investor who owns one ADU and several other small multifamily properties in the Boston area. Weekley said that for many people in the Boston area, owning a property with a legally rentable ADU can be a gamechanger as the cost of living skyrockets. “Having the rental income is huge for a lot of homeowners,” she said. “I have had clients who, if they had been able to legally convert part of their property to an ADU, could have stayed in their property

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York, Pennsylvania

Investors Prepare for Pivot in the “White Rose City” By Carole VanSickle Ellis York, Pennsylvania, is one of the oldest cities in the country. Also known as “The White Rose City” in a nod to the white heraldic rose of England’s House of York, the city was initially named Yorktown in 1741 for its namesake across the ocean. York, which also  styles itself “the first Capital of the United States” (this is debatable since Philadelphia, Baltimore, and Lancaster all preceded it), is home to many historic sites and has emerged as a top retirement location in the past few years thanks to high quality healthcare, relatively affordable cost of living, and a vast array of attractive, seasonal events, including the York Fair, which opened in 1765 and is generally considered “America’s first fair.” Opportunities for real estate investments abound in the area, whether an investor prefers long-term investments or shorter-term fix-and-flip options. According to ATTOM Data, fix-and-flip deals are particularly attractive in York right now and showed profit margins of more than 107% as of Q3 2023. “Pennsylvania is home to…four of the 10 best markets for house flipping by ROI,” observed Motley Fool research lead Jack Caporal in March 2024. In addition to York, Caporal listed Scranton, Pittsburgh, and Harrisburgh/Carlisle. Caporal also used Q3 2023 numbers in his report, indicating York’s 2023 gross flipping profit was nearly $105,000. While York, like most areas of the country, is struggling with low housing inventory, local real estate investor Eric Brewer observed that the “frenzied activity” of 2021 and 2022 has eased off. “We are not seeing people putting in offers sight-unseen or waiving inspections very often anymore,” he said. Brewer, who is the owner and founder of Integrity First Home Buyers (IFHB) and helps train and coach other investors to be prepared for any market condition, called the current buyer approach to making a home purchase “more disciplined,” but noted that his company is still consistently listing homes and seeing them spend only about 10 days on the market after being listed. IFHB invests in rental properties and fix-and-flip deals, and Brewer reported most successful offers are coming in at or slightly above list price. He credited realistic listing prices and solid renovations for this, noting, “You must price according to location and condition or your property will sit.” Inventory is Falling, but Prices Remain Steady Traditionally, real estate analysts have been able to predict future market shifts based on the amount of inventory available and the current sales prices of homes in an area. When prices rise out of reach due to tight inventory and, in many cases, rising interest rates, analysts expect the market to hit a “tipping point” at which prices will begin to fall and, at around the same time, inventory will begin to increase because fewer home purchases are made at the peak price point. However, in York, while home purchase volumes have been declining steadily and prices have held more or less steady (rather than risen) in recent months, the market does not appear to be closing in on its tipping point just yet. Brewer noted that an investor with a strong off-market lead generation program will likely not experience the same strain the broader York market is experiencing when it comes to finding properties to purchase. “When it comes to off-market inventory, we have not seen a substantial change, but that is likely because we have a history of spending a significant amount of capital on marketing and keeping ourselves top-of-mind for people who are in a position that forces them to sell,” he said. For example, he said, IFHB does not deal with “discretionary buyers” who may be weighing their options, deciding whether to remain in their current home or sell and purchase a new one. Instead, they deal with homeowners who must sell, possibly due to an employment-related relocation, divorce, or job loss, and are in the process of deciding how to accomplish the sale. According to Realtor.com, there are currently just over 600 homes for sale in York, with 241 rentals also listed. Although sold and listed prices began to diverge in March 2024, York properties still are typically selling for “approximately the asking price,” Realtor.com analysts stated at that time. Rocket Homes analysts agreed and, the following April, reported the median sales price of York properties was up about 15% over the same month a year prior, and inventory was down nearly 1% compared to April 2023.  Relatively flat inventory levels could have something to do with local population trends as well. Since the 2020 U.S. Census, the York population has increased by only a few thousand people. However, a growing interest in retiring in the York area could turn that particular trend around in the coming years. According to U.S. News & World Report’s “Best Places to Retire in the U.S. in 2024” report, York is the fifth-most-attractive location in the country in which to spend retirement years. The area’s relatively low cost of living also makes it attractive to professionals working in the Baltimore area. “This small metro is known for its rich history, museums, and numerous hiking trails,” raved USA Today reporter Amritpal Sandhu-Longoria. Multiple colleges and universities in the area attract a consistent population of students as well, and the York Historic District, a national historic district that encompasses more than 300 buildings, attracts thousands of tourists annually as well as retirees. New Legislation Could Eliminate Unprepared Investors At present, York is still a highly attractive market for investors, and competition for off-market deals remains fierce. Cash buyer activity remains high as well. However, at least some of that cash-buyer activity could fade away as more Pennsylvania cities adopt legislation requiring residential property wholesalers to apply for and receive a license before entering the business. A number of Pennsylvania cities have already passed legislation requiring residential wholesalers, who typically get properties under contract and then assign the contract to another investor for a fee, to

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Streamlining Nonbank Real Estate Transactions

Engage with Reliable and Thoroughly Vetted Industry Partners By Amy Kame and Jonathan Gearhart In the nonbank lending industry, the successful closure of a loan heavily relies on a number of stakeholders to work together to achieve a common goal. Borrowers, lenders, brokers, real estate agents, law firms, and title companies all depend on one another, and these entities play pivotal roles in ensuring transactions are executed efficiently and securely. Together, they form a partnership that safeguards the interests of all parties and ensures a smooth, secure transaction process. This collaboration is essential in a market characterized by its swift pace and complex transactions. Private Lender Law — Identifying a Problem  Private Lender Law (PLL) is a leader in the nonbank lending industry, offering an extensive array of legal services tailored specifically for private lenders. Operating from New York City and New Jersey, PLL has carved out a niche as the go-to national law firm for lenders across the United States. Their expertise encompasses a wide range of areas, including foreclosures, loss mitigation, and efficient closings. With a client base of over 100 lenders nationwide, PLL is dedicated to delivering personalized and dependable legal solutions in all 50 states. During the loan closing process, PLL finds itself working with the key stakeholders through phone calls, emails, and, in some cases, as many as 50 or more communication touch points to close a loan. Given the importance of each deal to all involved, it is imperative that everyone clearly understands their role in the closing process, and of equal importance, the nuances of private lending. These transactions are unique and require experience to close efficiently. As the team at PLL grew its business and worked with more of the private lending community, a pattern began to develop. One stakeholder in the deal increasingly caused more friction than the others, and the lack of private lending experience too often kept deals from moving forward. That stakeholder was the title company. Why Title? The title company guarantees that the property title is clear of any encumbrances or liens that could jeopardize a deal. Title companies can be relatively small, having 3-5 employees and working in one market, but also large organizations employing hundreds and operatingin many states. The title companies most often seen by the PLL team in their daily work are those working in a single market, often mirroring the borrowers who most often use private lending for their real estate financing needs. The “1 market” title company often does not operate at scale and makes traditional purchases and refinances along with the occasional private lending deal. Experience is limited, and the PLL team often must explain and re-explain lender requirements for title. This slowed enough deals down over time that the PLL team had to explore a way to better service their clients, enter Private Lender Title. The Creation of Private Lender Title Private Lender Title (PLT) is a distinguished provider of title and settlement services specializing in the private lending sector. With extensive experience and a focus on the nonbank real estate lending industry, PLT provides comprehensive title searches, issues title insurance, and manages the settlement process. Their expertise helps streamline closings and safeguards lenders and their investments against potential legal issues. This support system is vital in today’s real estate market, where the accuracy and speed of title services can significantly impact the success of transactions. Private Lender Title is strategically positioned to transform the title service landscape for private lenders through its collaboration with Private Lender Law. This alignment ensures a seamless integration of legal and title services, enhancing the support system available to lenders throughout the loan process, not just at closing. Drawing on the extensive experience of Private Lender Law, which has worked with thousands of title companies across all states, PLT has crafted a title workflow designed to mitigate inconsistencies and inefficiencies in our industry. Addressing the Persistent Threat of Fraud The Private Lending industry faces challenges from the persistent threat of fraud and operational risks posed by insufficiently vetted partnerships. Recent developments involving major title companies like Riverside Abstract and Madison Title have brought attention to issues within the title industry. According to a memo from Fannie Mae’s deputy general counsel, Jeff Goodman, both companies are prohibited from participating in any Fannie Mae-related mortgage loan closings due to their involvement in fraudulent real estate closings orchestrated by Boruch Drillman, as deemed by the Department of Justice. This highlights the importance of engaging with reliable and thoroughly vetted partners in the industry. The ongoing issue of fraud further complicates the landscape, as detailed in the FundingShield Q1 2024 report, which underscores a sector with vulnerabilities. Nearly half of all transactions exhibited potential fraud risks, with common forms including identity theft, fake loan applications, and counterfeit documents. The report revealed that problematic loans averaged 2.22 issues each, signaling a lack of adequate controls by closing agents and lenders to identify and correct these discrepancies. Additionally, 9.2% of transactions were flagged for wire risks, and there was a 9.8% incidence rate of issues in CPL (Closing Protection Letters) validations, pointing to sophisticated and evolving fraud techniques that pose significant financial risks. The repercussions of partnering with entities that fail to uphold legal and ethical standards are severe, affecting not just the immediate transactions but also the broader credibility and operational capabilities of lenders in the market. As the industry continues to evolve amidst these challenges, the role of reliable partners who can ensure that transactions are executed with proper due diligence is more vital than ever. The Role of PLL and PLT in Enhancing Efficiency and Security The demand for a streamlined, secure transaction process has never been higher. Together, Private Lender Law and Private Lender Title create a partnership that anticipates the needs of lenders facing the dual challenges of a fast-paced market and increased fraud. This section describes how PLL and PLT collaboratively enhance both efficiency and security in real estate transactions, providing support

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Frame it and Forget About It

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JELD-WEN Windows and Doors When you are investing in properties to rent or to sell, you want to frame it and forget about it. Investors know that replacements and repairs can dramatically influence the potential ROI of an asset. Enter JELD-WEN® doors and windows to help get it right. Beautiful and durable. That is the simplest way to describe JELD-WEN’s doors and windows. An extensive range of interior and exterior doors, as well as wood and vinyl windows that bring beauty and security to the spaces that touch lives. JELD-WEN ensures that building professionals have access to products that can be trusted to perform. Think about it: Doors and windows are the workhorses of any home. Each morning, back doors everywhere are opened to start the day by letting out the beloved family dog, while curtains are pushed to the sides, letting in the sunshine as the coffee brews. A gaze out the window can be an invitation to go, or an invitation to stay. Opening the door to run a routine errand or embark on a major adventure holds as much promise as closing that same door to settle in for a home-cooked meal, game night with friends or a quiet night reading a book with the window cracked just enough to let in some fresh air. With the importance of doors and windows to everyday life, you want quality products and materials that will last. And you want to be able to trust a manufacturer that has proven to last. For nearly 65 years, JELD-WEN has stood the test of time by consistently delivering trustworthy quality and striving to enhance living experiences through innovative, aesthetically pleasing and energy-efficient products. “We’ve grown from 15 employees and one millwork plant that was purchased at an auction in 1960 to manufacturing facilities in 16 countries across North America and Europe,” explained John Marchionda, chief operating officer, Windows, N.A. “We are makers, first and foremost. Makers of high-quality products. Makers of a lasting impression on people and the planet.” Don’t just take their word for it — their reputation for quality is widely recognized. For the past two years, JELD-WEN tops the windows and doors company in the construction industry category on Newsweek’s “Most Trustworthy Companies in America” list. 3 Pro “Need to Knows” “Repair or replace” is the most important question Determining how best to tackle a problematic door or window is an important undertaking. When it comes to windows, consider lower-cost fixes that can extend the life of existing windows when facing one of these problems:  » Cracked or broken glass  » Minor water leakage  » Stuck sash  » Broken muntins or mullions  » Missing or damaged drip cap  » Damaged exterior window casing Replacement can be the best option with the following issues:  » Foggy glass  » Structural issues  » Major water leakage  » Broken faux muntins or mullions Of course, it can be advantageous to consider the investment and operational upside of new windows — as well as the opportunity for a fresh look. When it comes to exterior doors, start by asking some basic questions:  » Is the door dented, scratched or weathered?  » Are the edges of the door panel cracked?  » Does the door let in drafts? Is it missing a weatherstrip?  » Is the door hanging unevenly on the hinges?  » Is it often a hassle to close and lock the door? It is possible to infuse new life into a struggling door. If it is scratched or weathered, fresh paint can do the trick, with the potential to add a bold statement to the home’s design. If you notice a draft, try installing a new threshold or weatherstrip. Even a sagging door can often be resurrected by simply adjusting the hinges or rehanging it. When it comes to door replacement, bigger issues such as structural damage, termites, rot, warping or significant weathering may signal it’s time to replace. The upside is, research from Zonda’s Cost vs Value report suggests that when you sell a property, you are likely to recoup most of what you spent on a new door. Knowing it is an investment with a measurable return can help in the decision-making. Expenses can be determined with the range of choices available with a new exterior door. Consider different sizes, architectural styles, aesthetic options and slab materials. Customization allows for a variety of glass openings, glass designs, stains and paint colors. Sustainability is a priority Whether your audience consists of renters or homebuyers, it is noteworthy that millennials are one of the most environmentally focused group of those seeking housing. From the National Association of Homebuilders to Green Builder, studies show sustainability is a priority and people will pay for eco-friendly options, including energy efficiency and healthy homes. As an investor, it pays to address these priorities. There are many ways to make homes more sustainable, efficient and healthy. Here’s how JELD-WEN can help:  » Offer Forest Stewardship Council (FSC) certified doors and windows, a sustainable choice that’s mindful of resource consumption, and they are built in the closest available facility and with locally sourced materials whenever possible.  » The solid foam used within JELD-WEN’s fiberglass and steel doors creates an effective barrier between the indoor climate and the outside elements, providing superior energy efficiency. According to the U.S. Department of Energy (DOE), fiberglass entry doors can offer more than five times the insulating value of solid wood.  » AuraLast® pine, a patented wood product exclusive to JELD-WEN, uses a water-based treatment process, which produces up to 96% fewer volatile organic compounds (VOCs) during the manufacturing process than traditional treated wood. It also resists rot and termite damage.  » All Low-E performance glass from JELD-WEN uses industry-leading laminate glass technology that blocks up to 95% of harmful UV rays. This layer of protection can help protect furniture from sun damage over time and lower heating and cooling costs. JELD-WEN has been an ENERGY STAR® Partner since 1998. According to the DOE,

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Building a Legacy as a Real Estate Entrepreneur

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“Do the Uncomfortable Until it Becomes Comfortable” Michael Lewis is an independent business owner with HomeVestors® of America, Inc. in the Fort Worth, Texas market. He started his business, Morning Glory Investment Group, Inc., in 2012 after a successful and lucrative career as a real estate agent with RE/MAX and Keller Williams. His wife, Ashley, is a former pastor and chaplain at a children’s hospital. His 15-year-old son, Walker, is an aspiring professional motocross athlete. Life Before HomeVestors While still in high school, Michael lied about his age so he could get a job working in a health food store. Health and fitness became a passion for Michael, and he got into body building and nutrition, the income from which he was able to go to college. One of his fitness clients worked for Coldwell Banker and sparked Michael’s interest in real estate. Two weeks before the World Trade Center collapsed, Michael got his real estate license. He went to work at Coldwell Banker and after an unsuccessful first year he moved to RE/MAX. Under the mentorship of a successful agent, Michael learned how to become successful, and subsequently worked at Keller Williams selling over a hundred houses per year and eventually managing the sales team. “It was all about speed,” Michael explained. “It was an all-or-nothing pursuit, never home, no time to pursue my true passions, and definitely no time for family. Something had to change.” Fortunately for Michael, the landlord for one of his commercial properties was a HomeVestors franchisee and convinced Michael to give HomeVestors a call. Becoming a HomeVestors Independent Business Owner “I called the HomeVestors corporate office and spoke with a gentleman by the name of Larry Louwagie,” remembered Michael. “That was in August of 2012. I bought my franchise and started training in October.” Having been a successful real estate agent, Michael did not see the need to follow any of the HomeVestors programs or systems. “I had an ego and I had a pride issue,” Michael recalled. “And I failed.” “Then a very successful HomeVestors franchisee by the name of Chas Carrier became my mentor. He insisted I follow the already-proven program and within the next six months I bought around 19 homes.” Twelve Years Later Today, Michael owns two franchises and is focused on building his legacy. “Flipping homes is a great life and financially lucrative, but flipping homes is a high-paying job. Building a real estate portfolio allows you to build a legacy. I want my business to serve me, so rentals have become my primary focus. I currently have 51 rental properties with a goal of 100 and I have a full-time property manager on my payroll along with a maintenance team.” One of the things that Michael does with his rentals is charge below-market rents. As Michael explained, “All the rents in my portfolio are below market value and my real soft spot is for single mothers. If a single mom needs a great place to live to bring up her children, I will charge her what she can afford. It’s just the right thing to do.” “I love HomeVestors. They have allowed me to have a wonderful journey where I can follow my passions. And my biggest passion, outside of my family, is having a ministry for young athletes. I currently coach and minister to a professional motocross race team called “Next Level Racing” where mentoring is the primary focus. Advice from an Expert “My advice for anyone getting started in real estate investing is simple.” •             Always do the right thing •             “Swim upstream” (go the extra mile) •             Jump in with both feet •             Do the uncomfortable until it becomes comfortable 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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Danielle Nguyen — VP of Research, John Burns Research & Consulting

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A Conversation About the State of the Single-Family Rental Industry For the serious real estate investor, studying and analyzing data is of primary importance to help achieve success through solid and rational decision making. Data takes the emotion out of making decisions. One important caveat is to be careful whose data you are looking at and putting your trust in. For this discussion, we reached out to a leader in the industry, John Burns Research and Consulting. John Burns Research and Consulting produces independent research and custom consulting advice to help executives make the most informed decisions possible. REI INK sat down with Danielle Nguyen, Vice President of Research, to discuss the Single-Family Rental Industry and to discuss some insights into what lies ahead. Danielle, to begin, how about some background on you and how you became the Vice President of Research at John Burns Research & Consulting? I have been at John Burns Research and Consulting for approximately eight years, starting on the Demographics team—learning the ins and outs of how demographics impact housing. I then transitioned onto our Research team, where I sit today. My main focus areas are our for-sale (new construction) and rental (single-family rental, build-to-rent, and apartments) coverage. Can you tell us a little about John Burns Research and Consulting and how our readers can get in contact? John Burns Research and Consulting provides independent research and consulting services related to the U.S. housing industry. We help our clients make informed housing investment decisions based on our market research, knowledge, and experience in the sector. We service our clients two different ways. First, our Research memberships are full of timely analysis and forward-looking insights—all supported by data to help our clients make the best decisions. And our consulting services provide our clients with customized analysis to help them answer specific questions on topics ranging from developing strategy to acquiring a specific property, community, or company. We have experts strategically placed across the country who know their markets extremely well to be able to guide our clients through important investment decisions. Your readers may visit www.jbrec.com for more information. I know your data and reports are proprietary, but can you give us a little insight and directional indicators into the State of the Single-Family Rental industry? Here are a few important bits of information I can share. The single-family rental (SFR) industry remains in solid form. SFR rent growth is normalizing in most markets compared to historical long-term averages through January 2024. However, the over-all supply/demand dynamics support continued rent growth in 2024 and beyond—albeit likely less robust than in 2021–2022. Single-family new lease asking rent growth rose +4% YOY nationally in February 2024. Single-family new lease asking rent growth increased 6%+ YOY in 38 of the top 99 SFR markets we track as of February 2024. Some markets, like Chattanooga, TN, Knoxville, TN, Savannah, GA, and Lexington, KY, saw +10% YOY single-family asking rent growth in February 2024. The economy remains strong with solid job growth, a healthy labor market thanks to immigration, and rising incomes year over year—though at a slower pace than year-ago levels. And home prices are rising YOY across most top housing markets, aided by very low resale inventory. National SFR occupancy trends are in line with the historical average, per the US Census, correlating with healthy but moderating rent growth. Also, for-sale affordability challenges put homeownership out of reach and support demand for SFR through longer tenant retention. Nationally, the monthly mortgage payment to purchase a typical single-family starter home exceeds the monthly SFR Rent by $1,000+ on a similar home. Saving for a down payment remains the number on financial hurdle for purchasing a home, based on our New Home Trends Institute’s Household Sentiment Survey (March 2024). Higher borrowing rates and limited for-sale resale housing supply have flowed into tight SFR inventory. This drastically reduces investor home purchases along with higher financing costs (rising cost of capital). With severely limited resale supply, SFR operators look to homebuilders for inventory and building new homes to rent (BTR) to grow their portfolios, according to our 4Q23 SFR Survey. Overall, we expect resiliency for the SFR industry and for single-family rent growth. National single-family new lease asking rent growth has historically stayed positive even in recessionary periods, compared to home price growth and apartment rent growth. There has been much press lately portraying the real estate investor as the “bad guy” and being responsible for skyrocketing home prices and locking the little guy out from buying a house. Do you and/or JBREC have any opinions you can share on that? New and resale home inventory is still near all-time lows. Despite resale inventory ticking up slightly, housing is still undersupplied today — which may prop up home prices. With rates hovering around 7.5%—challenging affordability—many would-be sellers/homeowners may stay in their homes and will likely avoid selling unless necessary. Investors remain a relatively consistent 23% to 25% of the market, with both investor and owner-occupant activity declining due to rising interest rates (rising cost of capital). Large rental investor groups began selling more homes than they are buying, and small rental investors continued selling as well. Nationally, institutional investors (1,000+ homes) account for just 3% of total investor-owned SFR homes, with mom-and-pop investors (1–9 homes) owning the majority of SFR homes (80%). Across the top 20 markets, institutional investors account for 2% (Riverside-San Bernardino, CA, and Austin) to 24% (Atlanta) of all SFR homes within their markets.

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