Individual Homeowners Carry the Single-Family Rental Market

While institutional investors continue to flock to the booming single-family rental market, a Realtor.com survey reminds us that by and large, this remains an industry populated by mom-and-pop homeowners.

Recent homebuyers are overwhelmingly open to using their home as a way to generate income and offset expenses, according to its latest survey.

While many owners are using traditional methods such as taking on a roommate, some are also employing more creative tactics when it comes to generating income from their home, such as renting out their outdoor space or parking spot or listing the home as a vacation rental.

“As the next generation of home buyers has embraced ridesharing and short-term rentals, it’s a natural next step that they begin to think of their biggest asset — their home — as a potential income stream,” said George Ratiu, manager of economic research, Realtor.com.

“For people looking to take advantage of the sharing economy, in addition to traditional approaches it may be worthwhile to explore creative solutions, such as listing your home as a vacation rental when you leave town, or renting your outdoor space or pool. Even a small amount of income each month can multiply over a year or more and can turn into bigger returns.”

The survey of 3,026 consumers, which was conducted online by HarrisX in July 2021, found that:

• Sixty-nine percent of recent homebuyers would rent out part of their home if it had a separate entrance, kitchen and bathroom; and
• Thirty-two percent of consumers have already rented out a room, space or outdoor feature of their property, most commonly taking on a long-term roommate (10%) or renting a room on a short-term basis such as on Airbnb (8%).

Creative rental solutions that consumers have employed include:

• Renting outdoor spaces such as a parking spot (7%), or a yard/pool (6%); and
• Six percent of those surveyed have rented their whole home while they were away and 7% have lived in a smaller unit on their property while renting out the main house.

“Extra income” was the top reason why consumers said they chose to rent out part or all of their home at 53%. Next were: extra spending money (37%), to lessen the burden of general monthly expenses (35%), to offset major home expenses such as the mortgage (29%), and to cover a family vacation (16%).

Rental preferences among homeowners include:

Fifty-two percent of consumers would feel comfortable renting a part of their home that has its own entrance, kitchen and bathroom to someone they already knew, 30% would be comfortable as long as they could vet the renter and 29% would be comfortable with a renter that was vetted by a third-party, such as an app.

A surprising 16% of people would rent a space to anyone if they really needed the money.

Methodology: Realtor.com commissioned HarrisX to conduct a national survey of consumers. 

Survey results were based on a sample size of 3,026 adults and it was conducted from July 21 to 23.