On The Market

169: New Single-Family Rental Survey: Small Investors to Take CONTROL in 2024 w/Rick Palacios Jr.

Dec 18, 2023

Rick Palacios Jr., an expert in the single-family rental market, discusses the results of a survey on 270,000 single-family rental homes. Topics include rent growth, expenses, high mortgage rates, and why institutional investors are struggling while mom-and-pops are buying.

45:27

Creator website

Episode guests

Rick Palacios Jr.

AI Summary

AI Chapters

Episode notes

Podcast summary created with Snipd AI

Quick takeaways

The survey reveals that the single family rental market is expected to have a normalizing year in 2024, with rent growth returning to pre-pandemic levels and acquisition volumes slowing down due to increasing costs of capital.

The lock-in effect caused by low interest rates reduces housing supply in the single family rental market, leading to tight inventory, while rising property taxes and insurance costs pose challenges for rental operators in managing expenses and profitability.

Deep dives

Insights from 270,000 Single Family Rentals

The podcast episode features an interview with Rick Palacios Jr., the director of research and the managing principal at John Burns Research and Consulting. The guest discusses insights from a survey of 270,000 individual single family rentals, conducted in partnership with the National Rental Home Council. The survey examines topics such as rents, occupancy rates, and future outlooks. It reveals that the single family rental market is expected to have a normalizing year in 2024, with rent growth returning to pre-pandemic levels and acquisition volumes slowing down due to increasing costs of capital. Furthermore, discussions are highlighted around the lock-in effect, rising property taxes, and the impact of insurance and labor costs on the expense side of the equation.

Introduction

2min

Net Operating Income and the Lock-In Effect in the Housing Market

5min

Insights on Single-Family Rental Market and Costs

14min

Property Manager Salaries, Market Slowdown, and Capital Constraints

4min

Challenges and Opportunities in the Single-Family Rental Market

18min

Investment Strategy, Benefits of Single-Family Homes, and Reminder to Leave Reviews

4min

For years, we’ve been hearing about how the single-family rental market is being bought up by hedge funds, iBuyers, and institutional investors. For the average investor, it seems like the corporate landlords are getting an unfair advantage—they have better data, better financing, full-time staff, and deep pockets to buy whatever and wherever they want. But a new single-family rental survey shows that the big players aren’t the ones controlling the market—it’s the little guys.

To walk us through this massive, single-family rental survey, is Rick Palacios Jr., Director of Research at John Burns Research and Consulting. Rick’s team accomplished the seemingly impossible task of measuring activity for 270,000 single-family rental homes to see how landlords are faring in 2023 and what their plans are for 2024. And while this survey focuses on REITs (real estate investment trusts), private groups, and other larger-type buyers, it provides invaluable insights for the small-time landlord.

Rick will walk us through rent growth (and decline) from the past year, where he believes rents will be in 2024, whether or not expenses could continue to rise, how high mortgage rates are affecting buyers, and why institutional investors are struggling in this market while mom-and-pops are buying!

In This Episode We Cover:

What the largest single-family rental survey says about the 2024 housing market

Rent “normalization” and why those who aggressively projected rising rents will get hit hard

Rising expenses, insurance costs, and whether or not it could get even worse

Why institutional investors pulled out of the market while small-time investors thrived

How long the “lock-in effect” could last as high mortgage rates become the new norm

Whether or not the multifamily rent crisis could spill over into the single-family market

And So Much More!

Links from the Show

Find an Agent

Find a Lender

BiggerPockets Forums