Q: What markets does the industry operate in?
To date, NRHC members have entered a number of markets across the U.S., including: Atlanta, Miami, Tampa, Phoenix, Houston, Dallas, Chicago, Denver, Los Angeles, San Francisco, San Diego, Sacramento, Orlando, Seattle, Charlotte, Jacksonville, Minneapolis and Las Vegas.
Q: How are the homes typically acquired?
Many of the homes purchased by NRHC members are not available for purchase through the usual channels. Typically, these homes have gone through the foreclosure process with a bank or mortgage servicer and are sold as-is, for cash only, through trustee sales.
Q: What types of properties do NRHC members typically purchase?
NRHC members typically buy three-bedroom, two-bathroom single-family homes priced at the mid-range of the local market.
Q: What is the typical turnaround time—from purchase to renovation to lease?
The renovation process typically takes about four to six weeks; however, in some cases it can take a few more weeks, especially for older homes. After that, a home is ready to be leased.
Q: How much money goes into renovation?
Homes purchased by an NRHC member typically undergo extensive renovations, often equivalent to 10% of the home’s value. Data show that average home renovation ranges from $15,000 to $25,000.
Q: How do NRHC members manage and maintain their portfolio of homes?
Before we move into a market, we strive to ensure the right team and tools are in place to acquire homes and also to lease, manage and maintain the properties to the highest standards. Underpinning all this is the industry’s goal of hiring top professionals, ranging from real estate agents to HVAC experts, to support our homes and communities. NRHC member associates understand each market and all the idiosyncrasies, patterns and local trends, which enable us to serve residents and prospective residents extremely well.
Q: How did the industry develop?
Single family homes for rent have been part of the U.S. housing landscape for decades. Even before the financial crisis, an estimated 14 million homes were rented out by their owners. The market for single family rental homes really began to take off in 2006, when institutions began bringing professional management and a long term focus to this industry. Serving the industry at the highest level meant there was an opportunity to create professionally serviced, national single-family rental platforms, which mirrors what happened in the apartment market 20 years ago.
Q: What’s the difference between institutional investors/owners and small-scale investors/owners?
As part of the search to answer growing demand for single family rentals, NRHC members saw an opportunity to raise the bar and create a differentiated single family rental experience. We strive to offer renters the highest quality and service through homes that are professionally maintained by management teams and backed by institutional owners who provide stability, peace of mind and the highest servicing standards.
Q: How are rental rates determined?
As with most rentals, rates are based on the value of the home and local market conditions. In comparison to rental costs for a comparable multi-family apartment unit, the rental rate typically charged for a single-family home with an average square footage of 1,800 feet, a full yard and all the benefits of a house is generally lower.
Q: What impact do renters have on communities?
On average, renters stay in their properties for an average of five years, resulting in stable communities and neighborhood cohesion. In fact, many of the residents that rent our homes are renting in communities they have already lived in for many years.
Q: Is the industry in competition with first-time homebuyers?
Prices are rising because segments of the housing market are recovering and local economies are improving. This is happening in markets across the nation, including those where NRHC members are not active. Institutional investors in total own fewer than 200,000 homes – a tiny portion of the more than five million homes sold in the U.S. last year. An important fact about most of the homes that NRHC members purchase is that these homes generally do not come up for sale on the open market. They are typically not available through the usual channels used by first-time homebuyers because most of the purchases are through trustee sales, post-foreclosure. These homes often need serious renovations and must be paid for in cash; they typically don’t qualify for mortgages. Overall, these homes represent a small fraction of available supply and are not the types of properties first-time homebuyers are able to purchase.
Q: What is securitization and why are rental contracts being securitized?
Securitization is a common financial practice that is well regulated and regularly done with all types of assets. The securitization of single family homes is similar to any other commercial or residential mortgage trust used to finance properties of all types. In this case, it is simply the securitization of a group of assets and is no different from the way most apartment buildings in America are financed.
Q: Will institutional investors sell their portfolio of homes when the market fully recovers?
We are committed to building national, long-term businesses that cater to the portion of the market that will always desire rental options. Selling all our homes at once would work against these goals. We strive to provide high-quality, professionally managed rental properties now and well into the future, just as the institutions that entered the multi-housing market more than 20 years ago helped create higher standards across the industry. We have no interest in making “quick flips.”