OwnAmerica CEO Greg Rand Says the National Association of Realtors is Hurting Renters when it Attacks Investors

Ever since the initial public offering for Blackstone’s Invitation Homes with Fannie Mae’s backing, opinions have been circulating regarding the Single-Family Rental market. One of particular interest is that of the National Association of Realtors.

To quote HousingWire, “NAR made its stance on investors clear on several occasions: Investors are creating more competition for first-time homebuyers, possibly even keeping them from homeownership.”

NAR President William Brown wrote a letter to Mel Watt, Director of the Federal Housing Finance Agency, making it clear he believes Fannie Mae’s involvement is only assisting large institutions to compete with homebuyers. He goes on his letter to state that, “investors drive up the price of rents and remove affordable inventory from the hands of American homeowners.”

However, Greg Rand, CEO and Founder of OwnAmerica, made it clear in his interview with HousingWire that he is thinks NAR forgot about a very important constituency in the housing market – tenants.

Home Renters are Important Too

Rand believes that in its efforts to champion homebuyers, the National Association of Realtors is drawing a line in the sand against investors, and their tenants.

real-estate-ownamerica.jpg

Rand says, “If a first-time homebuyer loses a house to an investor, that means that a renter family is going to live in that house, and they deserve housing options in safe neighborhoods and good schools as much as first time buyers. I don’t think it’s right for NAR to draw a competitive line where investors and renters are on one side and homebuyers and NAR are on the other. I would say homebuyers are competing with renters, and that’s the way the market works.”

There are many people in the housing market who benefit from investors in the Single-Family Rental space, including existing owners who property values are supported by investor demand.

“The turnaround of the housing market in 2011 was driven by a 65% increase in investor activity in a year that owner occupant home buyer activity was down 15%,” said Rand. “Investors played the dominant role in healing the housing crisis.”

Rand believes that rather than drawing a line between homebuyers and investors, the NAR should be more attentive and inclusive to the needs of all homeowners, even the ones who are not owner occupants.

NAR Being Hypocritical

Rand points out the National Association of Realtors cheered as home prices reached unsustainable levels in 2006, and when the bubble burst, created distressed property training certifications to help its members capitalize on foreclosures and short sales.

“The moment those homeowners lost their home to the crisis, they became tenants and second class in the eyes of NAR,” states Rand.

Rand further makes the point that, according to NAR’s own statistics, more than 1,000,000 home sales every year are investor purchases. Those home sales generate an estimated $4 billion in fees to NAR’s dues paying members.

What Do You Think?

What do you think about NAR drawing a line in the sand between homeowners and investors? Leave us a note in the comments below!

Property Management Growth: More Deals, Less Renovation

Originally Posted by Adam Stern on Oct 21, 2016

OwnAmerica President, Adam Stern, hosts Flipnerd’s REI Classroom and covers property management growth and how more deals with less renovation can work in your favor.

Property Management Growth

Webcast Transcript

We’re going to talk about a turnkey provider that bought an SFR portfolio, set the buyers expectation in terms of what kind of yield in asset they should expect, and is now looking to exit the investment and sell their term equity that was in a portfolio, but now it’s being sold individually to a retail investor.

The real key thing about executing on this strategy is making enough money so that each individual transaction makes sense for you as a turnkey provider. But also, and if you’re like most turnkey providers, building your property management company and putting more doors under management to grow that section of your business as that’s going to be a driver for, you know, every person that owns a property is a potential buyer, and every person that owns a property in the future might be a potential seller.

So the idea of building property management, at the same time driving your individual sales to a point where, again, if you’re used to doing 10 transactions a month and making $10,000 to $15,000 plus per, doing 30 transactions a month and making $5,000 to $6,000 or $7,000 per doesn’t sound like that bad of a trade-off if, again, you’re happy with that results, and you’re happy with not doing the renovations, and you’re happy with not doing the tenanting and the aggregating of the actual portfolio acquisition. And the growth of your property management company is just going to benefit.

So this all kind of coalesces into a cohesive strategy where foreclosures are low. They’re back to historical norms. You’re out there looking for inventory.

We at OwnAmerica have discovered a massive amount of inventory that is just waiting to be tapped into. We’re going to be tapping into it via the OwnAmerica platform which has launched, or I should say relaunched as a portfolio management tool, allowing SFR owners to track and optimize their portfolio until it’s time to sell. And hopefully, if this all made sense to you, you’re going to be a buyer on our platform.

So I invite you to see it at www.ownamerica.com, and if you’d like to reach out you can reach us.

Create Your Free Account on OwnAmerica

Is your interest piqued? Ready to create a free account on OwnAmerica? Find out what your SFR portfolio is worth and track your valuation over time. If you’re ready to sell your full portfolio or properties within your portfolio, list your properties. If you’re looking to buy and expand your portfolio, view our available inventory and make an offer.

Register for your free account today and see just how easy it is to join OwnAmerica’s network of SFR investors!

Search OwnAmerica SFR Inventory

The Marketplace for Single Family Rental Portfolios

Originally Posted by Adam Stern on Jul 26

OwnAmerica President, Adam Stern, hosts Flipnerd’s REI Classroom and shares a few tips on how to get buyers to take interest in your rental portfolio.

The Marketplace for Rental Portfolios

Webcast Transcript

I wanted to talk to you about something that has been a challenge for single-family rental property portfolio owners, try to say that three times fast, which is making a market or finding a market of buyers that will want to look at, and underwrite, and have interest in buying your single-family rental property portfolio.

The way OwnAmerica has done it, and we’ve developed this concept over a lot of years, through OwnAmerica.com, we offer free analysis and valuation, which is free and cool for owners to use. They upload their portfolios, they get a free valuation, and they get free packaging which attracts a lot of inventory.

And the idea behind it is if you attract a lot of owners that own properties, an owner that owns 10 probably has aspirations to own 50. A guy that owns 50 probably has aspirations to own 200. So the way we make a market is by giving away free data, free valuation, and attracting owners to one single platform where they can track their value and congregate in one space.

That works out great because we get a lot of action and a lot of people looking at our platform to either look at their own portfolios or other people’s portfolios. But the challenge is also making a local market for these kinds of portfolios. And we’re of the opinion, as opposed to a lot of the investors that we talk to, that real estate agents are not useless. Some of the things we have done with real estate agents . . . and we were real estate agents in the past.

My partner, Greg Rand, ran a really large brokerage company in suburban New York called Rand Realty. I’ve been registered in the residential brokerage industry for a lot of my career. And there’s an old kind of disposition toward investors thinking agents really can’t do very much for them.

What we’ve been able to do is, through our platform, incorporate agents who are trained and certified through a company and an organization called the Five Star. They offer a certification called the Five Star Certification. They get trained in how to be an investment property expert, and they essentially get assigned to portfolios on our site, or they even self-upload portfolios to our site. We train them and we talk to them every single week about doing the following, which puts them in the realm of very useful realty professionals to investors.

They take a portfolio and they go around and they visit local investment clubs. They go to real estate investment meetings. They are part of the real estate investment associations locally. They talk to accountants and attorneys, and dentists and doctors, and anyone that wants to build their wealth through real estate. And they take what we have, which are stabilized single-family property portfolios, which don’t require much work, are cash flowing on day one, and you can buy and just kind of start receiving income just so long as you trust and know the property management company.

So they work from the ground up, we work from the top down, dealing with large caps and institutions and all the big guys that buy on our website. And together, together we create this market of owners and buyers and local people that, in a world like residential real estate portfolio sales, where there is no friction-free marketplace, this is the beginning of something really special.

And that’s how we’ve been able to create a situation where, if you have a portfolio, there’s a place to bring it, there’s a place to value it and track it, and there are people that are trained in this industry to actually create a market for it. So I appreciate you guys watching. You can check us out at ownamerica.com.

Create Your Free Account on OwnAmerica

Is your interest piqued? Ready to create a free account on OwnAmerica? Find out what your SFR portfolio is worth and track your valuation over time. If you’re ready to sell your full portfolio or properties within your portfolio, list your properties. If you’re looking to buy and expand your portfolio, view our available inventory and make an offer.

Register for your free account today and see just how easy it is to join OwnAmerica’s network of SFR investors!

Free Portfolio Valuation OwnAmerica

Single-Family Rental Market Under Trump Administration

Originally Posted by Greg Rand on Dec 15, 2016

CEO Greg Rand Addresses IMN 5th Annual SFR Investment Forum

A pioneer in bringing technology and services to the institutional Single-Family Rental (SFR) market OwnAmerica CEO, Greg Rand, spoke today at the IMN 5th Annual SFR Investment Forum in Phoenix. He shared his views on what the Trump Administration will mean for the SFR market, and how changing demographics and evolving sales practices are changing the market.

Highlights of Rand’s presentation:

How President Trump will impact the housing market?

ownamerica-single-family-rental-homes.jpeg

The housing market thrives on optimism.

That announcement we saw last week with Carrier keeping 1,000 jobs in Indiana is going to become a regular occurrence.

Why? Because American corporations have gotten pretty good at buttering up politicians in Washington. The way they usually do it is by writing a check to their campaigns. That won’t work anymore.

The way to butter up President Trump is to give him a press conference, a success to announce. A factory saved, returned, or opened. A failing company acquired and jobs saved.

This will create a drumbeat of optimism that will translate into confidence.

I predict the homeownership rate will begin a sustained upward trend in 2017 and beyond.

What would a HUD Secretary Ben Carson do for housing?

The biggest opportunity to boost housing at the federal level right now is for FHA to adapt their multi-family lending product to be friendly to single-family investors. I believe that proposal will get legs with Ben Carson in charge of HUD.

Why? If you read his book, you will understand that what motivates and animates Ben Carson is education. He will see the home as the place kids do their homework and read. He will recognize the impact housing can have on education.

He will instinctively know that, to a kid, a home is more of a home when it’s a house. Expanding access to capital for investors of Single-Family Rentals will make sense to him and he will green light the policy.

Demographics are changing. Millennials don’t want homeownership. Is this good for the Single-Family Rental Market or bad for the housing market overall?

Millennials don’t want homeownership, but why? Is it because they desire the lifestyle benefits of flexibility and mobility of renting, or because they are scared by the housing market, having grown up into adulthood during a housing crisis?

The answer is lifestyle. Research by Better Homes and Gardens Real Estate reveals something we’ve already seen anecdotally: Millennials are renting where they live and buying investment property. They are not scared of the housing market. They just don’t want to be tied down yet.

Is a single-family home’s value different if it’s sold vacant to a home buyer than if it’s sold occupied to an investor? If so, why and by how much?

Yes. Right now there is a 9% discount from retail market value when it’s an occupied rental property. However, a landlord with an occupied rental property will incur “friction costs” of 8-12% of the value if they vacate that rental home in order to sell it. Friction costs include renovation costs, and downtime to renovate and find a tenant.

We have seen the discount go from 13% in 2014, to 9% today, and the gap continues to close. Why? Because the market for occupied rentals is becoming more efficient. We are creating competitive pressure for buyers and it’s driving prices up. By 2018, market value for occupied rentals will be the same as for vacant homes.

About OwnAmerica

Founded in 2010, OwnAmerica has been part of the effort to institutionalize Single Family Rental, America’s largest asset class. The company creates tools and online markets for institutions to buy and sell performing SFR properties, and has trained and certified more than 4,000 real estate agents to service SFR clients. Now those tools, technologies and professional services are being offered to investors at every level. OwnAmerica.com now offers free portfolio analysis to SFR owners, and a private marketplace to buy and sell occupied single family rental homes.

Search OwnAmerica SFR Inventory

Overseas Investors in US Housing are Getting Ripped Off

Originally Posted by Greg Rand on Jan 10, 2017

I saw some interesting research recently from a few credible sources that retold an old and familiar story: investors across the world are attracted to residential real estate in the US, and many are actively doing something about it. However, what the research leaves out is now many potential investors don’t take action because the bridge from there to here is so rickety.

According to an Asia Society Special Report, Chinese investment in residential property amounted to $93 billion between 2010 and 2015, while commercial investment saw just $17.1 billion over the same period. And what are these investors buying? Luxury condos in gateway cities and second homes. Negative cash flow investments that will not product income, but will preserve and grow their capital (as well as get it out of their country).

new-york-ownamerica.jpgI think we sometimes forget how big a deal it is to have property rights that we know are truly protected. Imagine amassing a family fortune and seeing other families like yours have it taken away by government action. That happens elsewhere in the world, but not here.

So capital preservation is the mission of many overseas investors, and for lack of way to execute an effective investment strategy, they buy the obvious thing. A condo in New York.

High taxes. High common charges. No rent. And they are ecstatic.

Contrast this with our domestic clients, who will hold up a closing on a 100-unit Single-Family Rental portfolio until the seller agrees to pay for new keys, or replace an air conditioning unit. They have minimum requirements on cash flow yield, and walk away every day from 4 and 5% net yield investments because they are too low. How would a Chinese investor like to own 100 houses in Dallas, TX and get a 4.5% positive cash flow, as well as the appreciation of one of America’s fasted growing metropolises?

real-estate-ownamerica.jpgWe are finding out now as we bring high quality packages of Single-Family Rental homes to the overseas market, and cut out the daisy chain of middlemen who sometimes try to mark US real estate up over 30% before presenting it to potential buyers. (One time we were actually asked to take a couple of portfolios off our website before a “connector” would show it to a Chinese client. He didn’t want them to see the price before his 40% markup would be added.)

Look for a trend to take hold in 2017 whereby overseas investors begin placing large bets on US Housing, but demand positive cash flow as well as capital preservation. OwnAmerica is taking part and going on the road in 2017 to build a new bridge, with lower tolls, smoother roads and a much better return on investment.

 

On Market vs Off Market Single Family Portfolios

Originally published Jul 5, 2017

OwnAmerica President, Adam Stern, hosts Flipnerd’s REI Classroom and talks about how the MLS isn’t a good fit for rental properties or rental portfolios and how posting them off market can make more sense.

On Market vs Off Market Portfolio Sales

Webcast Transcript

Everyone knows when they’re selling real estate, they can call any real estate brokerage or agent locally and get good service and have their listing find its way to the MLS. There’s a massive apparatus out there to sell empty for-sale homes to homebuyers. But, when it comes to selling a single-family rental property with a tenant in place or multiple single-family rental properties, or a portfolio, I should say, there’s really no market out there.

We’ve experimented with the MLS, and what we’ve found is there’s really not a good fit for rental properties going in the MLS, particularly because there are not the right fields for the MLS to market these properties in terms of what the return metrics are and what the important information about a tenant and the income is. And most of the people that are looking on the MLS and other portals that lead to the MLS, like Zillow and Trulia, they’re homebuyers and they like to buy homes in a particular way which means inspecting the property before they actually make an offer.

The way that portfolios and even individual single-family rental properties are bought is generally driven by an off-market strategy. So when you look at the pros and cons of going on-market versus off-market, in order to go on-market through a local broker using your MLS, you generally need an empty property without a tenant in place. You can try, if you want to, to sell a property with a tenant in place on the MLS, but I think what you’re going to find is you’re going to be asked for access and you’re going to be asked a lot of things by homebuyers that are looking at it as a home instead of an investment.

What we’ve been able to do at OwnAmerica is create an environment where all the particulars about the income and the expenses and the operating margins of a property or a portfolio of properties are brought to the forefront. And the way we go about doing this is not by having access to the MLS, which we don’t list properties on that channel. We use all the other channels that are considered off-market, which include, of course, OwnAmerica.com.

We have a strategy where we as a company market these things nationally to a big database of owners that have portfolios that are being tracked on our website, which means we have a lot of owners that are tracking value on our website. Those owners are also buyers because the owner that owns five might very well want to own 20. And we have buyers that are just coming to our site to buy properties.

So having an online platform is helpful. Utilizing local agents to market the portfolios locally to REIAs and investment clubs and local investors that they build a base of, we’ve been having a lot of success with that. And that’s still off-market because it’s, again, not on the MLS. What we’re finding is the creation of a network of buyers that understand what it’s like to not have access to good-quality inventory is robust. And we’re gathering a lot of them on a platform like we have at OwnAmerica.com, but also finding a lot of them out in the field.

And it’s really a beautiful thing because the demand is out there and now, what we realize by offering free valuations to attract inventory on OwnAmerica.com, there’s plenty of inventory. So off-market doesn’t seem so off-market anymore. In fact, I would say off-market is almost a better way to get a portfolio sold than an on-market strategy by going on the MLS. Just my experience with it.

Create Your Free Account on OwnAmerica

Is your interest piqued? Ready to create a free account on OwnAmerica? Find out what your SFR portfolio is worth and track your valuation over time. If you’re ready to sell your full portfolio or properties within your portfolio, list your properties. If you’re looking to buy and expand your portfolio, view our available inventory and make an offer.

Register for your free account today and see just how easy it is to join OwnAmerica’s network of SFR investors!

Buy and Sell Portfolios OwnAmerica

How to Price a Portfolio of Single Family Rental Properties

Originally posted Dec 15, 2016

OwnAmerica President, Adam Stern, hosted Flipnerd’s REI Classroom and taught viewers how pricing of Single Family Rental properties are calculated within a portfolio and offered some key considerations to look for. In addition, Adam explained what’s deducted from the fair market value to come up with the final price.

Pricing a Portfolio Around Single Family Rentals

Webcast Transcript

OwnAmerica, my company, is the premier single-family rental property portfolio trading platform operating in the United States right now. And I am the number one single-family rental property portfolio salesperson. As such, since we’re single-family rental property portfolio experts – try to say that three times fast – we’ll be talking about a subject that’s near and dear in my heart and near and dear to all my client’s hearts, which is pricing a portfolio of single-family rentals.

There seem to be lots of different opinions on this because the commercial brokers who treat a portfolio of single-family rentals as more like a commercial property, they have a different opinion on how to price this versus OwnAmerica’s opinion, which is indicative of our background. We have a background that’s deep in the residential real estate industry, the traditional brokerage industry.

ownamerica.png

And the dichotomy I see between commercial and the way they price portfolios and the way we price portfolios is a lot of times, you’ll talk to investors and commercial guys and they’ll want to price your portfolio based on cap rates. They’ll look at the income the property portfolio provides and they’ll figure out what a prevailing cap rate is in the marketplace. For those of you who don’t know, cap rate is pretty much your yield after expenses. And they’ll price based upon coming to that level.

Being in the residential brokerage industry, OwnAmerica has come to understand that residential real estate is priced on comparable values. So the way we go about pricing portfolios is a really simple formula. It’s fair market value, or comparable value, minus capex, or capital expenditure. So let’s me just take you through it for a second.

Comparable value is how every home that gets sold on the MLS is priced. Your realtor goes out or some kind of valuation company goes out. They look at comps that have been sold in the neighborhood or the market that most closely resemble the properties that they are being compared against. You take some kind of average of all of those properties and then you assign a value based upon the conditions of property, essentially.

So what we do on OwnAmerica is we do this in every single property in every single portfolio that we come into contact with. The way we do it is through our website, ownamerica.com, people upload their portfolios and we don’t have a human do a comparable property values but we get our values from a computer, from an AVM, an automated valuation model that sifts out a number that’s very much like what an agent or valuation company would price it that.

Once we figure that out, we have a really honest, no BS, conversation with the sellers about what condition is, and we figure out what likely price per square foot the properties will require to get up to market value, and we could track that capex number out, really simple, $3 per square foot times 2,000 square feet, that’s your capex number. Fair market value, or comparable market value, minus capex, equals what the property is worth. You add all those up and you have your portfolio price.

All the rest of it’s figured out, due diligence between buyer and seller coming to a price or the pricing, the ultimate pricing which it sells is figured out between a buyer and seller coming to a price, and then figure out during due diligence if that price holds true to the current condition of the property. It’s that simple.

Create Your Free Account on OwnAmerica

Is your interest piqued? Ready to create a free account on OwnAmerica? Find out what your SFR portfolio is worth and track your valuation over time. If you’re ready to sell your full portfolio or properties within your portfolio, list your properties. If you’re looking to buy and expand your portfolio, view our available inventory and make an offer.

Register for your free account today and see just how easy it is to join OwnAmerica’s network of SFR investors!

« Older Entries