Attractive Properties Become Harder to Find for SFR Investors by NREI featured by SVN | SFRhub Advisors

When investing in a single-family home, the targeted market is what will make or break the critical investment decision. A lot of attractive properties become harder to find for investors in recent months. The median price of an existing single-family house, at $276,900, was much higher in June 2018 than it was the year before, according to the National Association of Realtors.

The median price of an existing single-family house, at $276,900, was much higher in June 2018 than it was the year before, according to the National Association of Realtors.

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As home prices rise, investors in single-family rentals are struggling to find new properties to add to their portfolios.

“The retail market for vacant homes has become extremely tight as home buyers and investors compete for the low levels of inventory on the market,” says Greg Rand, CEO of OwnAmerica, an online exchange for occupied SFRs.

Some investors are still buying houses in markets in the Southeast and Midwest. However, many companies now avoid the bidding wars to buy houses by only considering portfolio purchases or seeking “off-market” sources to buy single-family homes. Others have simply stepped away from investment, waiting for home prices to moderate before buying more assets.

“There will be more opportunities down the road for single-family rental companies to go back into more aggressive buying mode,” says Daren Blomquist, senior vice president for property data provider ATTOM Data Solutions.

Market by market
As prices rise, active investors have moved to less expensive markets. “Most investors stopped buying in California and Phoenix, but are still very active in Texas, Atlanta, and Florida. The Midwest is becoming more and more popular as well,” says Rand.

These investors are also buying fewer properties than they used to. Institutional investors bought 16,974 single-family houses and condominiums in the second quarter of 2018. That’s down from a peak of 73,156 in the third quarter of 2013, according to ATTOM. At the current level, professional investors account for 2.0 percent of all single-family home and condominium sales in the U.S.—similar to the level over the last few quarters. The figure is up from 1.9 percent in the first quarter of 2018, but down from 2.3 percent a year ago.
The median price of an existing single-family house, at $276,900, was much higher in June 2018 than it was the year before, at $263,300, according to the National Association of Realtors.

Investors are still able to raise the rents on SFRs, but rents are not nearly high enough to justify new purchases at the current prices. As a rule of thumb, the monthly rent from a rental home should equal at least 1.0 percent of the property’s purchase price, according to the “1 percent rule” used by to determine whether a property represents a good cash-flowing rental opportunity, according to Blomquist.

The average fair market rent for a three-bedroom rental property in 2018 is $1,127 according to ATTOM’s analysis of the data from the U.S. Department of Housing and Urban Development. Using the “1 percent rule,” that rent would justify the purchase of a home that cost a maximum of $112,700. “In the short term of the next year to 18 months, I suspect opportunities to acquire cash-flowing single-family rentals will continue to diminish,” says Blomquist.

However, investors can still find markets where they can buy new assets cheaply enough to operate them as rentals.

“The top 23 counties with the highest potential gross annual rental yield all have median prices below that threshold ($112,700),” says Blomquist. “These are markets largely in the Southeast, Mid-Atlantic and Rust Belt—places like Baltimore, Montgomery, Ala., Atlanta, Detroit, Syracuse, N.Y. for example.”

Home prices may also stop rising so quickly, giving SFR rents a chance to catch up in some markets. “I don’t see anything on the horizon that would bring prices down, but I do expect them to flatten a bit,” says Rand. “The rate of appreciation should not exceed 4 percent nationally. It never does for very long, so we are due for an easing of price appreciation.”
Meanwhile, a recession could prove to be a boon for SFR investors. “If the recession that many economists are expecting to hit around 2020 does, in fact, hit, that could trigger a correction in home prices and that could actually improve buying opportunities for single-family rentals,” says Blomquist. “Rents will likely still continue to rise even during a correction in home prices.”

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Contact Jeff Cline at SVN | SFRhub Advisors
SVN | SFRhub Advisors, LLC
Phone: 602-441-5354
2400 E. Arizona Biltmore Circle
Suite 1400
Phoenix, AZ 85016

This Map Reveals Whether It’s Better to Own or Rent a Home in Every State by MSN.com featured by SVN | SFRhub Advisors

Ever wondered if it’s better to own or rent a home in your state? Well, a new map from HowMuch uses data to determine whether it’s smarter to buy or rent in each state. Continue reading to learn more.

Originally posted by MSN.com

A new map from HowMuch uses data to determine whether it makes more financial sense to buy or rent a home in each state.

Saving up enough to buy your first home is exciting for a number of reasons, not least of which is the fact that you no longer have to cut a rent check to someone else for a place that isn’t yours. Oftentimes, purchasing is also the cheaper option in the long run. But what if continuing to rent is actually the more fiscally sound choice in the area where you live? If you’ve been wondering if that’s the case where you are, a new map could make it a little easy to figure out by revealing whether it’s cheaper to rent or own in every state.

The new visualization from the team at HowMuch was created using housing data collected in March 2018 by Zillow and GoBanking Rates, and labels each state depending on whether it’s cheaper to rent or buy there. There are also a few states that they classified as neutral, simply because the average difference in cost between renting versus buying there was less than $50 a month.

By and large, you’ll notice it’s cheaper to buy a place in America, with renting being more expensive — on average — in a whopping 40 states. However, there are a handful of places where the numbers suggest that renting is the better way to go. The states where it’s cheaper to rent in 2018 are Oregon, Idaho, Montana, Wyoming, Colorado, Utah, Hawaii, and New Hampshire, as well as Washington, DC.

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It’s a little less clear what the best option is in Nevada, Arizona, South Dakota, Alabama, North Carolina, and Delaware, which are all classified as “neutral.”

Besides assigning “buy,” “sell,” or “neutral” to each state, the HowMuch folks also created a bar graph to better illustrate just where it makes the least sense to rent (looking at you, New York).

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Then again, there are a handful of places where buying and renting are both considerably expensive options. For instance, in Hawaii, Washington, DC, California, and Massachusetts either option will set you back over $2,000 — on average — per month.

Of course, everyone’s financial situation and priorities are different, so there are plenty of reasons why you may need or want to rent in a place where it’s not technically the cheapest option, and vice versa, but the map is still an interesting look at the differences in the housing markets around the country at a macro level. Though, if what you’re on the hunt for is simply a super-cheap house in a wonderfully affordable city, this might be a bit more helpful.

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Contact Jeff Cline at SVN | SFRhub Advisors
SVN | SFRhub Advisors, LLC
Phone: 602-441-5354
2400 E. Arizona Biltmore Circle
Suite 1400
Phoenix, AZ 85016

8 Ways to Promote Fire Safety in Your Rental Properties by BiggerPockets.com featured by SVN | SFRhub Advisors

No matter where your rental property is, it’s pertinent to promote fire safety. Preparation is critical as a single-family rental investor. Read below to learn eight tips and tricks to develop fire safety plans for your rental properties.

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Originally posted by BiggerPockets.com

The New York Times is calling the early fire season of 2018 the new normal as more than 100 wildfires burn across the United States.

These devastating fires are burning homes and structures, destroying forests, fields, and hillsides, and taking lives.

According to the National Interagency Fire Center, as of Aug 10, 2018, there are currently 100 active fires burning over one million acres in the U.S. Most of them are in the western states. This number changes daily as fires are extinguished and started during the hot summer months.

When a wildfire rips through a community, there is not much one can do besides listen to official evacuation orders and prepare for safety measures.

But before a fire starts, there are things every homeowner should do to make sure they are as prepared as possible for fire season. Rental property owners and managers should be prepared to inform tenants of proper safety measures to take during fire season. Fire prevention for rental properties includes preparing the property for fire safety, both inside and out.

Here’s a look at some important fire prevention tips and safety measures for rental properties.

Interior Fire Safety
1. Smoke Alarms
Your home should be equipped with smoke alarms on every floor, in every bedroom, and outside every sleeping area. As a landlord or housing provider, you are required to provide working smoke detectors in your residences per your state and local laws.

Smoke alarms should be tested each month. You should include a condition in your lease agreement asking your tenants to test the smoke alarms every month and to inform you immediately if one is out of order. Additionally, it is a good idea to personally test smoke alarms during your routine inspections.

2. Fire Extinguisher
It is a good idea to have at least one fire extinguisher on every level of your home. Landlords and property managers may choose to provide fire extinguishers to their tenants. The lease agreement should outline who is responsible for keeping the fire extinguisher maintained if it’s provided by the landlord.

Check your state laws to see if you are required to provide a fire extinguisher. While most states require smoke detectors and carbon monoxide detectors, there are few laws about fire extinguisher requirements. The exception is multifamily properties, where code requires fire extinguishers in hallways and outside entrances.

Regardless of if you provide a fire extinguisher or not, remind your tenants of the value of their important fire safety devices.

Related: How to Recover From a Fire in Your Rental Property

3. Escape Plan
Encourage your tenants to establish an escape plane in the case of a fire. As a housing provider, you should prioritize your tenant’s safety at all times. Provide your renters with information on fire safety, including information on the importance and value of creating an escape plan.

An escape plan will include speaking with every household member, identifying smoke alarms and fire extinguishers, marking exist points for different fire situations, knowing how to use escape ladders if necessary, designating a meeting place outside the house, and informing kids and practicing what to do and where to go in case of a fire.

4. Document Valuables
The right insurance will be extremely valuable when disaster strikes. Insurance will help replace belongings that are destroyed in a fire. In order to get the most out of your policy, however, it will serve you best to have a comprehensive inventory of your things. Your renter will most likely rely on their renter’s insurance policy to replace their items. As fire season approaches, remind your tenants to go through their home and write down out a list of valuables, take pictures of items, and keep copies of receipts.

5. Your Insurance
A landlord insurance policy will cover the exterior of the building and any belongings you keep on the property — like appliances or maintenance equipment — that could get destroyed in a fire. Additional coverage can also include loss of rent insurance, which will pay rental income while a property is getting repaired if it’s uninhabitable due to a fire.

6. Renter’s Insurance
Renter’s insurance is an affordable option to give your tenants peace of mind that their belongings will be replaced if damaged by a fire. Landlords and property managers can require their tenants to carry a renter’s insurance policy as a condition of the lease. Remind your tenants of the value of renter’s insurance, and encourage them to specifically talk to their provider about a coverage for fire damage.

Exterior Fire Safety
7. Firewise Landscaping
When considering the outside of a home, firewise landscaping is extremely important for preventing the damaging effects of wildfires to a property. According to the National Fire Protection Association (NFPA), wildfire researchers created the concept of the home ignition zone (HIZ). The HIZ is the area around a home that can ignite and destroy a structure due to radiant heat.

There are three zones that make up the HIZ: the immediate zone (up to five feet from the home), the intermediate zone (five to 30 feet from the home), and the extended zone (30–100 feet from the home).

While it is unlikely to prevent wildfires from occurring, the goal of a firewise approach is to improve a home’s chance of surviving a wildfire with little or no damage.

8. Firewise your Property
Keep the first three to five feet around the base of the house clear of flammable material that could fuel a wildfire; things like tall grasses, shrubs, leaves, pine needles, straw, firewood, and organic landscaping mulch should be kept away from the house.

You should clear roofs and gutters of dead leaves and debris or anything else that could spark a fire from a floating ember. Anything that can burn should also be removed from underneath decks and porches.

As you move further away from the house, you want to keep landscapes free of pine needles, leaves, and dead grass. Keep vegetation green, healthy, and manicured.

You can include conditions in your lease for your renters to landscape the property in a firewise way, but it might serve you best to follow up in person to make sure the job is done correctly as you approach fire season. Send reminders to your residents to remove flammable objects that might be stored under decks or near the home.

The NFPA provides additional tips for types of trees and firewise landscaping advice to prepare your property for fire season.

Final Thoughts
The effects of wildfires on communities are devastating. As a housing provider, you must prioritize your tenants’ safety. One of the best ways to keep your tenants safe is to include fire safety and firewise efforts in your management plan. It is a good idea to communicate fire safety to your renters and send reminders before fire season begins.

If a wildfire threatens or reaches your community, keep in touch with your renters during the difficult time. Your renters will be looking to you for guidance and help regarding their housing situation.

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Contact Jeff Cline at SVN | SFRhub Advisors
SVN | SFRhub Advisors, LLC
Phone: 602-441-5354
2400 E. Arizona Biltmore Circle
Suite 1400
Phoenix, AZ 85016

Phoenix Home Rental Prices Outpace Most of U.S. in the First Half of 2018 by BizJournals featured by SVN | SFRhub Advisors

Arizona is on fire, not only temperature-wise but commercial real estate-wise as well. Our hometown has continued to outpace the single-family home rental market throughout the United States. Continue to read the article below to learn more about this incredible market shift.

Phoenix Arizona skyline panorama cityscape skyscrapers downtown, palm trees, night

Originally posted by Phoenix Business Journal.

Single-family home rents in Arizona continued to outpace the national average during the first half of the year, according to a report from CoreLogic.

High rental home demand is fueling higher prices nationally, and that’s particularly true in Arizona. Nationally, rents rose a cumulative 4.1 percent from January to June, according to CoreLogic.

In Phoenix, rents increased an average of 4.7 percent year over year for the first six months of 2018. The report points to a higher employment growth rate — 3 percent in Phoenix compared with 1.6 percent nationally — as fueling more demand for rental housing.

“High demand and low supply of lower-priced single-family rental properties continue to push up rents for this segment of the rental market,” said Molly Boesel, principal economist at CoreLogic.

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Contact Jeff Cline at SVN | SFRhub Advisors
SVN | SFRhub Advisors, LLC
Phone: 602-441-5354
2400 E. Arizona Biltmore Circle
Suite 1400
Phoenix, AZ 85016

Progress Residential bags $1B to boost single-family rental business by HousingWire featured by SVN | SFRhub Advisors

Pretium Partners announced that it raised more than $1 billion, designated for expanding the company’s single-family rental business. The firm’s strategic focus is on providing investors a, “diverse pool of single-family homes across attractive major markets in the U.S. that are experiencing above-average employment and population growth.” This single-family rental market is growing extraordinarily rapid, and we’re excited to see what is in store next.

Originally posted by HousingWire.

Progress Residential, one of the nation’s largest operators of single-family rental homes, is planning a significant expansion of its platform thanks to $1 billion in new funding.

Pretium Partners, the parent company of Progress Residential, announced Monday that it raised more than $1 billion that will be earmarked for expanding the company’s single-family rental business.

Pretium, a specialized alternative asset management firm that focuses on residential real estate, mortgage finance, and corporate credit, said Monday that it closed Pretium Residential Real Estate Fund II.

The 5 most popular Phoenix neighborhoods for renters by AZBigMedia featured by SVN | SFRhub Advisors

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Renting has been on a steady increase during the past years, and there is no sign of it slowing down. In our hometown, Arizona, we’ve seen this change develop over the years and according to AZBigMedia, below are the top five most popular Phoneix neighborhoods for renters. Would you invest in these areas? Let us know!

Originally posted by AZBigMedia.

Phoenix has some of the best golf courses, water parks, and weather in the country. Phoenix neighborhoods are also some of the most popular for renters.

The appropriately named Valley of the Sun offers about 210 sunny days a year, giving residents plenty of chances to swim and enjoy the outdoors. Large companies like Intel, the American Express Company, and Wells Fargo & Company also call Phoenix home due to the strong local economy.

Whether you are interested in moving to Phoenix for the nice weather, a business opportunity or to retire, we’re here to help you find your perfect neighborhood to call home.

The researchers from Apartment Guide combed through Google data using generic keyword searches and combined those results with the most searched Phoenix neighborhoods on ApartmentGuide.com to determine the five most popular Phoenix neighborhoods with renters.

The research pointed toward neighborhoods ranging from city life to small-town feel, but all within a short distance of great food, entertainment and plenty of things to do. The Valley is the perfect place for young college students, those looking to retire and everyone in between.

Check out this list of the top five Phoenix neighborhoods and a few of their nearby perks.

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Contact Jeff Cline at SVN | SFRhub Advisors
SVN | SFRhub Advisors, LLC
Phone: 602-441-5354
2400 E. Arizona Biltmore Circle
Suite 1400
Phoenix, AZ 85016

Linear Living: The Rise of Single-Family Rentals featured by SVN | SFRhub Advisors

The rental market is as hot as the asphalt on a hot summer day. Since 2006, the amount of Americans living in rental properties have soared to nearly 37%, the most substantial percentage since 1965. In particular, the single-family rental market has been the fastest-growing segment of the U.S. housing market.

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The number of households lived in by owners declined from 76.1 million to 75 million in the aftermath of the housing crisis, according to Census Bureau data.

Originally posted by Multifamily Executive.

One sector of rental housing has enjoyed a particularly dramatic rise in the past decade: Single-family for rent is the fastest-growing segment of the U.S. housing market, according to an analysis by the Urban Institute, which reports that growth in single-family rentals has outpaced the growth of both single-family for-sale and multifamily housing in recent years—and it’s predicted to keep growing in the years ahead. According to the National Association of Home Builders (NAHB), 56% of the gains in rental housing stock from 2005 to 2015 were due to single-family homes.

The demand for single-family rentals has prompted a number of developers to tap into the market with a new product: cohesive single-family rental communities filled by niche renters with lifestyle needs that are unlike those of apartment renters.

Economic Factors Create Perfect Storm
Industry experts say the current economic climate has created a perfect storm for the single-family rental market’s success. Student debt, a tight job market, and the inability to save for a down payment have kept a number of potential home buyers out of the market.

“Credit markets are still extremely tight, and a lot of people don’t have the right credit score. With stricter lending terms than ever, some consumers aren’t even potential participants in the market,” says Dennis Cisterna, CEO of Investability Solutions, a real estate investment firm in the single-family rental space. “[These factors] are eliminating people from homeownership. Without more alternative solutions to getting people into homeownership, whether that’s a low–down payment mortgage or assistance programs, there’ll be a ramp-up in rentership, which presents a great opportunity for companies to be able to grow with single-family rentals.”

While many middle-class renters lack the money for a down payment, they do make enough to spend extra on a rental home. Matt Blank, principal at Scottsdale, Ariz.–based build-to-rent developer BB Living, says the average customer at one of the builder’s communities is a couple in their late 30s with two children and an annual income of $80,000 to $110,000. With that, they have the cash flow to pay the monthly rent on a single-family home, which is around $1,600 at one of BB Living’s properties.

BB Living has built six communities in the Phoenix metro area and is close to reaching the 1,000-unit benchmark. When the business first launched in 2012, BB Living offered consumers the option to either rent or purchase the homes, a strategy that allowed the company to figure out what the market needed while it got up and running.

“We sold 35 houses that way and rented 35 houses at the same time—the market seemed to want both options at the time,” Blank says. “But once we were able to prove the rental market and prove that people actually wanted to rent single-family homes, we were able to secure financing and stop the for-sale effort to focus exclusively on rentals.”

BB Living’s communities are located in master-planned communities that are already fully outfitted with neighborhood amenities like swim parks, golf courses, and large communal spaces. The company will soon break ground on its first stand-alone community of 217 single-family rental units with a resort-style pool, workout facility, dog park, and walking trails. The units will range from 1,500 to 2,400 square feet and include three to four bedrooms and a two-car garage.

Read the full article here.

What do you think? Let us know down below!

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Contact Jeff Cline at SVN | SFRhub Advisors
SVN | SFRhub Advisors, LLC
Phone: 602-441-5354
2400 E. Arizona Biltmore Circle
Suite 1400
Phoenix, AZ 85016

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