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U.S. Single-Family Rental Home Market Poised for Near-Term Real Estate Growth Opportunities, According to SVN | SFRhub Advisors

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By Ruth Seigel

Abrupt global economic downturn caused by COVID-19 leads investors to seek refuge and diversification
in opportunistic CRE asset classes growth, risk-stabilization and yield.

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Phoenix, AZ – (April 16, 2020) – As the world grapples to tame the coronavirus pandemic and overturn the economic effects of this unprecedented event, commercial real estate (CRE) investors are monitoring all asset class financial positions to lessen short-term portfolio risk while augmenting investments for long-term growth. SVN | SFRhub Advisors, along with industry experts, predict ongoing consumer demand for housing will position single-family residential (SFR) rentals as an investment portfolio standout. A CRE brokerage firm, SVN | SFRhub Advisors, dedicated solely to SFR/BFR (Build-for-Rent) portfolios recorded a 650% uptick in investment activity since mid-March 2020 for SFR/BFR portfolios on their technology platform, SFRhub.com, averaging 10,000+ listed homes.

Recent data from John Burns Real Estate Consulting (JBREC) outlines CRE sectors most likely to be affected following the pandemic, especially in the short-term, are hospitality, retail and office/co-working. Conversely, JBREC states SFR (while not unscathed in the short-term) should be positioned for faster market recovery and a better long-term play. Housing rental defaults will prove painful in the short-term, but the low supply of newly built rental homes in most markets, and capital seeking safety, yield and inflation hedge, should help SFR recover earlier than other residential real estate asset classes.

Jeff Cline

Jeff Cline

“Investors have reaped financial advantages of a 10-year bullish marketplace, notably the past few years with SFR portfolios, and the newer BFR market,” said Jeff Cline, executive director and principal of SVN | SFRhub Advisors. “For the first time in U.S. history, rental household growth outpaced U.S. home ownership.” He added, “Looking ahead, consumer economic, lifestyle, and work-at-home popularity indicate global investors’ near and long-term outlook for capital growth and income opportunities in single-family detached homes for rent is better than it’s been for several years.”

BFR communities encompass single-family homes built from the ground up specifically for renters and not home owners. These homes help to fulfill the vast housing need and rental shortage occurring across the U.S. According to JBREC, recently surveyed BFR projects had a very strong 97% stabilized occupancy rate prior to the COVID-19 pandemic.

U.S. homebuilders may turn to REITS, private equity and individual investors to purchase completed or near completed single-family communities for rental investment should the new home buyer market continues to retract. “For the first time, we now have several private capital group clients with tens of billions of dollars to specifically invest in the BFR space,” said Michael Finch, executive vice president of SVN | SFRhub Advisors.

Michael Finch

Michael Finch

Demand from millennials and older adults/retirees has destigmatized renting and touted SFRs’ benefits like increased space, yards and amenities representative of living in a single-family detached home. Skyrocketing unemployment, job uncertainty, and hefty student debt loans imply the SFR/BFR market should remain strong among millennials as home ownership moves farther out in time and remote working becomes more popular.

Cline notes, “SFR/BFR investors’ main concerns are rent revenue and occupancy. In the short-term, unemployment may impact rent rather than occupancy issues. As the economy recovers, demand for SFR/BFR will be a favorite among alternative investors with capital on the sidelines seeking refuge and stock market diversification for growth and income.”

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About SVN | SFRhub Advisors

SVN | SFRhub Advisors, based in Phoenix, is an independently owned and operated SVN® office. SVN comprises over 200 offices with 1,600 advisors. SVN | SFRhub Advisors is the only national single-family residential (SFR) & Build-for-Rent (BFR) dedicated brokerage that introduced the first-to-market digital commercial real estate fully transactional platform, SFRhub.com. SFRhub.com is the only SFR/BFR industry data provider with clean and verified data. SVN | SFRhub Advisors currently features a pipeline of over $2 billion SFR/BFR investment portfolios consisting of five or more homes and is also a member of the Forbes® Real Estate Council.

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Ruth Seigel
President – RS Marketing & Assoc.
[email protected]
602 320 4182

Single-Family Home Rentals are Dead? Discover the #1 Investment Opportunity FOR THE NEXT 20 YEARS

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By Gene Guarino, CFP

Are single-family home (SFH) rentals dead? Well, that depends on who you are renting them to of course. How does $200-$300 a month in positive cash flow sound? When I was 20 years old, that was exciting. Today, that doesn’t get me very excited at all.

Lets face it, one turn over with even one month of vacancy eats up an entire year’s worth of profits in most cases. Let me show you how to get TWICE the fair market rent with a long-term, low-impact tenant or if you’d rather, how you can make $10,000 or more NET per month with Residential Assisted Living.

The Baby Boomers are here and they are driving the demographics in housing for the next 20 years. Nearly eighty million of us were born between 1946-1964. We are the Baby Boomers, and we are turning 65 at the rate of over 10,000 a day. Life expectancy is increasing and many of us will live well into our 80s and 90s. There are 4,000 a day turning 85 and 70% of those people will need help for an average of 3.5 years. The 85+ year old group is the fastest-growing demographic of all in the U.S.

It is projected to triple over the next 20 years. Senior housing is a great place to be now and will only be getting better and better for the next 20-30 years.

The reality is that most seniors will not need a nursing home but they can’t live safely on their own either. They do need assistance and that is what is provided with Residential Assisted Living or RAL.

Many of you have already faced this situation with your own parents. If not, well, your time is coming. This mega-trend will last for several decades to come and you can profit from this unstoppable wave and help a lot of people by “Doing Good and Doing Well”.

Senior Assisted Living is the Best Real Estate Investment Opportunity for the Next 20 Years.

This mega trend is a “Silver Tsunami”and it has created a massive opportunity for smart investors who are poised to profit. Let me explain why “typical” SFH rentals are dead. If you rent a home to a typical tenant, you will get a typical profit of a few hundred dollars a month, maybe. With a typical turnover and a month of vacancy in between you may end up with little or no profit at all at the end of the year. Now, if you were to get TWICE the fair market rent, your profit increases exponentially. Instead of a few hundred dollars in profit you would be netting a few THOUSAND dollars in profit each month.

With your typical tenant you have a one-year lease. They may stay for a second or even a third year but they are looking to buy their own home and move out in most cases. That’s not bad but, on the other hand, what if they move out after a few months in the middle of the night and leave you with thousands of dollars of repairs from the damage they left behind? Been there, done that.

Let me ask a silly question: Would you rather have a long-term, low-impact tenant? A tenant that wants a five-year lease and wants to have two or three, five-year renewals on top of that? That is what an operator of a RAL wants. That is why senior housing is the best real estate investment opportunity for the next twenty years. Long-term, low-impact tenants who are willing to pay twice the fair market rent.

Why would someone pay TWICE the fair market rent and how do I find them!

The answer is your tenant, the operator of the RAL, will still be able to make a lot of money even after paying you twice the FMR. Let me fully explain that by crunching the numbers.

The national average for a private room in a residential assisted living care home is $3,500 per person, per month. Keep in mind that there are people paying two and three times that and there are people paying half that amount. You get what you pay for of course. Remember that 70% or more of the wealth in the U.S. is controlled by seniors. You may not be able to afford or provide for your own long-term care needs, but they can. Keep reading and I will share with you how you can live for free when you need your own long term care.

How much can I really make?

With a home that is licensed for 10 residents, at an average rate of $3,500 per resident, that is $35,000 per month in potential gross income. The expenses, including debt service or rent and even vacancy is about $25,000. That leaves a net profit of $10,000 per month for an average home. That is for an average home and an average clientele. I have homes that gross $40,000 and $50,000 per month and more. The reality is the expenses are virtually the same for an average home as they are for an above average home. The difference is the cost of the real estate.

As a landlord you could be very happy to have a couple thousand dollars per month in positive cash flow. As the operator of the RAL you can earn $10,000 to $20,000 net per month. That is a true win-win situation.

If you are considering renting your home to an RAL operator…

You will be well served to learn all you can about this opportunity. You will want to know what your tenant, the RAL operator, is supposed to be doing to be successful. That way you can better choose the right tenant and be set up for success from the start. At RAL Academy, I show people how they can profit whether they are a landlord or a tenant.

When we age we become more dependent upon the help of others in order to do basic activities of daily living. These self-care activities include ADLs such as cleaning, clothing, bathing, medication management and food prep.

You can profit either way.

This is not just another real estate “fad” that comes and goes.

This is a massive shift in housing demographics. You will either be riding on top of this unstoppable wave or you will hesitate, procrastinate and potentially miss it completely. That choice is yours but you will be a participant one way or the other. I have comparatively little competition. How many people do you know that are in the business of RAL?

With RAL it doesn’t matter whether the real estate market is at the peak or coming down from it, cashflow is cashflow. After 30 years as a real estate investor, doing everything from fix and flips, short sales, REOs, lease options and more, my goal is now just one thing: Significant long-term residual cash flow. Residential Assisted living gives you the opportunity to do one deal and you are done. For life.

What is the key to success in Residential Assisted Living?

The key to success in RAL is in the details. You need to know which type of home works best, what location is best, how to find the home that no one else wants that will work perfectly for a RAL home and how to do it quickly without all the guess work. You need to know how to find the right team to make your life easy and to fill the home with high-paying residents. I’m sure there are more questions coming to mind for you like: What about the liability? What about a two- or three-story home? What about… There is a lot to know, but the good news is you are not on your own.

If you want help in learning how to do this, it is available. Learn more at www.RALAcademy.com The phrase, “paying for speed” is not just an expression, it’s a reality. That’s why the Residential Assisted Living Academy was founded. To show others what to do and what not to do in an easy-to-follow, step-by-step process. I’ve done it, and I show you how you can do it too.

The “Silver Tsunami” is here and the opportunity to “Do Good and Do Well” is clear.

If you would like to learn more, at my training programs we go into depth so you will be totally prepared to succeed in this endeavor. Imagine having one RAL home providing your family a $10,000 per month POSITIVE CASH FLOW… Now, imagine scaling a bit and having two or three… now you’regetting the idea. It’s a new world out there. The days of making a few hundred dollars a month in cashflow per house are history. If you’d like to learn how to do one deal and make $10,000 per month or more, let me show you how you can make that happen. Gene Guarino, CFP is the founder of the Residential Assisted Living Academy. Learn more by visiting www.RALAcademy.com. Gene can be reached at: [email protected]