In 2021, I attended a conference that really got me thinking. The speakers, sponsors and attendees were all involved in the single-family rental (SFR) market. I attended to gather information to help our product development.
If you’re unaware of this market, SFR communities are booming. In the Washington, DC area where I’m based, this is not a prevalent trend (yet). However, in the southeast and western parts of the U.S., these communities are widespread and growing. Mind you, not one-off individual homes for rent — entire residential developments 100% comprised of rental homes. Would you be surprised to learn that in 2020, 64,000 new, single-family homes were built specifically for rental? While this is a tiny percentage of the total new homes built in 2020, it’s a 62% increase in build-to-rent (BTR) homes since 2017.
So, what’s driving this market? After all, renting a house is not a new idea. What is new is the marketing and packaging of the idea that reflects consumers’ growing desire for mobility, financial flexibility, privacy and community. Let’s break down those drivers.
Mobility. With the COVID-19 pandemic, employers had to reconcile that workers could indeed be productive from home. And if you can work from home, then you can work from anywhere (caveat: anywhere with decent broadband). Now, employees can work for a prominent company in a major market and live where they prefer (for example, closer to family or in a more affordable area).
Financial Flexibility. Home ownership has long been a traditional financial goal and point of pride. But for many Americans, it’s unattainable. Having enough savings for a down payment, qualifying for a mortgage, and student loan debt all contribute to the problem. Enter the SFH rental market. A nice home without the financial burden of a down payment or unexpected maintenance expenses. Empty nesters are also a prime audience for the SFR market – ready to be free of the cost of managing a home but not ready to downsize their living space.
Privacy. Apartments are a terrific option for renters; however, you share walls and common spaces with your neighbors. In a single-family home, you have “room to roam,” a yard, and dedicated spaces for work and play. As work from home proliferates, so does the need for additional dedicated spaces to conduct work.
Community. The SFR industry has figured out that it’s not solely about a nice house. They strive to create community – a neighborhood of like-minded residents (i.e., all renters) and include appealing amenities. A clubhouse, pool, fitness center, dog park and playground are among the typical “extras” found in newer, built-to-rent communities.
So what does it all mean? For us, it represents a tremendous opportunity. Rental property owners of apartment buildings and these newer SFR communities face challenges in maintaining the residences. There is virtually no way to predict when maintenance issues will pop up, making it hard to keep repair costs in-check and hard to keep from disrupting tenants’ lives. With the debut of Dwellwell, the multifamily industry now has the data, analytics, reporting and tools to move from reactive repairs to a planned, proactive, and yes, even preventative maintenance process.
Author: Dan Simpkins, CEO and Co-Founder, Dwellwell Analytics, Inc.