IRVINE, CA—Most investors still involved in the single-family-rental markets now view it as a good long-term play in an asset class that is early on in its maturity and with much room for innovation, ATTOM Data Solutions' SVP Daren Blomquist tells GlobeSt.com. According to a recent report from the research firm, more institutional investors are realizing the benefits of owning single-family rentals. While the biggest segment of the SFR market, both in terms of number of properties and number of investors, is still by far the mom-and-pop investor who owns one or two properties, that segment is shrinking. Meanwhile, the SFR market share of investors owning between six and 10 rental homes increased 65% from February to November 2017.
We spoke with Blomquist about this trend and where he sees the single-family-rental market heading.
GlobeSt.com: Can you give us an overview of how single-family rentals have changed in the eyes of investors?
Blomquist: Investors no longer view single-family rentals as a short-term opportunistic play, as many did about five years ago when home prices were at or near bottom and plenty of distressed properties were being sold at a discount. Most investors still involved in the SFR markets now view it as a good long-term play in an asset class that is early on in its maturity and with much room for innovation to create more efficiency and bigger profit margins.
GlobeSt.com: What are institutional investors' current views on this asset class?
Blomquist: The large institutional investors view this asset class as a good long-term play, but they are definitely no longer in acquisition mode; they are in optimization mode for their current portfolios and gearing up to build more inventory to rent where it makes sense.
GlobeSt.com: Where do you see the sector heading?
Blomquist: I see it maturing into a more stable asset class over the next five years, one that behaves more in line with multifamily and commercial real estate asset classes while still maintaining a more consumer flavor that comes with dealing with single-family homes that also can be owner occupied.
GlobeSt.com: What do markets with the highest share of multiple-property single-family rentals have in common?
Blomquist: Population growth, job growth, a relatively high percentage of single-family inventory built in the last 25 years that was priced at or below $150,000—near the bottom of home prices five years ago.
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Carrie Rossenfeld
Carrie Rossenfeld is a reporter for the San Diego and Orange County markets on GlobeSt.com and a contributor to Real Estate Forum. She was a trade-magazine and newsletter editor in New York City before moving to Southern California to become a freelance writer and editor for magazines, books and websites. Rossenfeld has written extensively on topics including commercial real estate, running a medical practice, intellectual-property licensing and giftware. She has edited books about profiting from real estate and has ghostwritten a book about starting a home-based business.
