Renters Care More About Amenities Than They Used to, But Affordability Issues Loom

Understanding demographics is the key to success in the single-family rental market, according to panelists at IMN’s Single-Family Rent Forum (East) held in Miami Beach last week. And for this asset class, that often means considering the needs of Millenials and blue-collar workers, who are increasingly looking for high-quality and varied amenities. 

Dog parks and trails, fitness centers, saltwater pools, flex space, electric vehicle charging stations, yard space and drains in parking garages for dog washing are all amenities potential tenants look for in single-family rentals, the speakers said.

Jenelle Berry-Cook, chief revenue officer of MCB Capital said although features like smart locks or smart hubs for thermostats are seen as a norm for most renters, their popularity has grown in the past few years and they’re now something that even Class B property owners have had to embrace.

Berry-Cook said tenants often hope to get their home insurance through the property management company.

“They’re also wanting other resident savings or get benefits from paying their rent on time, and those sort of loyalty types of things that help them build their credit and maybe think about how they can go from renting to owning on their own,” said Berry-Cook.

With good houses comes good amenities, said Westport Capital Partners principal Howard Fife, who believes it’s important to have open communication between property managers and tenants. 

“Every home, whether it’s a new home or not, we have some sort of smart technology in there. Something where, if you have a problem, you have someone you can talk to,” said Fife. “Any questions you have, you have a responsive property manager. That’s really the key amenity.

As well as amenities, Andy Zhu, director of business development at Pentagon Holdings, said it’s important to factor in location and property maintenance.

“At its core, people need houses, and they need good ones. The ones that are good and at a good price, they’re going to find,” said Zhu.

WFH Migration Patterns

With more businesses embracing remote and hybrid working models, the panelists said the work-from-home trend is expected to hold. That will encourage people to continue to rent, rather than committing to living in just one city, as WFH enables them to travel more and have a second residence.

A large number of residents from California, New York, Chicago and some coastal cities are migrating to the Sun Belt states and some regions in the south and west to take advantage of lower rent prices. Zhu said that trend will continue as white-collar workers, especially those in tech jobs, have higher pay and more flexibility. He said the price disparities are starting to flatten.

Residents generally want more space since they’re working from home, so having over four bedrooms is ideal. Fife said that means investors will have to consider spending more money to build or buy larger homes to accommodate those changing needs.

Affordability will be the biggest problem in the housing market, according to Fife, who said rent control could end up reducing supply because the economics of building won’t work.

“Unfortunately it’s an issue without an answer,” said Fife. “It has to be figured out.”

Zhu said the country is approaching peak unaffordability from both the mortgage and supply sides.

“How are we as builders supposed to produce this lower-income type of housing when even just the base cost, labor cost and material cost is really high? It’s a hard solution,” said Zhu. “Really we need more monetary support policy-wise, but it also has to be zoning changes.”

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