The Real Property Management Franchise Support Center recently sponsored The Iceberg Report — national research to better understand the needs and wants of property investors. We found that 10.8 million investors represent 98 percent of single-family rental property owners and 80 percent of all rental properties. Unlike other investment categories, the single-family residential investment market is dominated by small entrepreneurs who own five or fewer properties. Perhaps this is why our unique combination of a national organization and locally owned and operated offices has been such a winning combination.
You can download the Iceberg Report and read in full, but the following are some of the highlights of the research.
- Types of Structures of Renter Households. Out of the 43.7 million rental households, 15.2 million or 35 percent are single-family residences that represent 43 percent of rental residences. This segment of the rental industry is second only to apartment buildings.
- First vs. Subsequent Investment Opportunities. The first rental property purchase made by investors is typically found with the help of others. Real estate agents are the leading source, followed by friends and real estate investment clubs. Real estate investment courses also play a major role. In contrast, subsequent investment property purchases involve a much greater variety of inputs including personal contacts and internet sources. Investors quickly learn how to leverage multiple information sources to build their portfolios.
- Investor Location Preference. Two-thirds of rental property investments are made in the investor’s local area and 52 percent occur in the investor’s city or town. The role of national investors who are indifferent about a rental property’s location remains a smaller segment of the market.
- Price for Residential Property. Most investors buy rental properties priced below both the average new or existing home price. Only one-third are willing to pay for housing above $275,000.
- Intent of Property Acquisition. Property investors play an important role in upgrading and improving housing. Two-thirds of properties are renovated after purchase, and nearly half of all property investments are turned into rentals. Only a third of investors are “flippers”, who plan to sell the property as-is or with renovations.
- Property Management Preference. Doing it yourself and having a professional property manager is not a black and white decision for investors. Although half of investors handle all aspects of property management, 22 percent enlist the aid of a third party for some aspects of property management (primarily leasing vacancies), while 28 percent have a professional do all the property management work. This contrasts with past research that indicated only 20 percent of investors utilized a profession to assist with managing their properties.
- Most Frequent Rental Problems. The number one problem for rental property investors is unexpected maintenance. Since most investors have full-time careers outside of property investing, unexpected maintenance issues interfere with work and family activities. Next in importance is dealing with late or delinquent rent collection – reported by one in four investors. Tenant damage to property is the third most frequently reported rental problem for investors
The results of this study have painted a clear picture that single-family residential investors are becoming more serious and that rental properties are being recognized as a mainstream asset for small investors building a portfolio for retirement. They are increasingly selecting professionals to help manage their properties. And, professional property managers, like Real Property Management offices, provide much needed service to handle maintenance, rent collection and prevent leasing to tenants who damage property.
The Iceberg Report findings demonstrate how Real Property Management’s Franchise Support Center provides on-going intelligence to its offices so they stay a step ahead of competitors and better understand their prospective customers.
Would you like to read more? Please click on the following link to download the Iceberg Report .