News

New Study Shows Vast Majority of Rental Property Owners are Small Entrepreneurs




SALT LAKE CITY–()–The Real
Property Management franchise
, the nation’s leading full-service
property management organization, announced today key findings from The
Iceberg Report
, an annual report and analysis of the American
single-family residential investment industry. Real Property Management
was a primary sponsor of the study, which was created in partnership
with 2020 REI.

Landlords and real estate investors lease roughly 44 million households
and house 60 million people. There is an immense difference between the
perception of this market and the reality, according to the findings,
which were released June 13. According to the study, the majority of
rental property owners are actually small entrepreneurs who own five or
fewer units. This statistic equates to 10.8 million investors
representing 98 percent of all rental property owners or 80 percent of
all rental properties. This is vastly different from the perception that
all property investors are large-scale players with hundreds of units in
their portfolio.

“The single-family residential investment market has long been
misunderstood and dismissed as only an option for those wealthy enough
to use real estate investing as a business,” said Bob Pifke, CMO of
Property Management Business Solutions, LLC, the franchisor of Real
Property Management. “With the Iceberg Report, we now have a better
understanding of this unique market including who they are, what they
are interested in, how and when they buy properties, and the impact of
their investment activity.”

In addition, the findings show that personal referrals from family,
friends, and real estate agents were the primary means by which more
than half of investors found a property manager – contrary to what most
believe is internet-driven research and validation. There is an
increasing level of sophistication amongst rental property investors and
a higher level of financial acumen than previously thought.

The Real Property Management organization, along with other sponsors,
uncovered the following key information through the administration of
this research study:

  1. 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.
  2. 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.
  3. 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
    have no location preference remains a small segment of the market.
  4. 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.
  5. 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.
  6. 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.
  7. 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. Secondly, one in four investors frequently deal with late
    or delinquent rent collection, and 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 and more serious,
and that rental properties are being recognized as a mainstream asset
for investors building a portfolio for retirement,” added Pifke.

The Iceberg Report is a new annual study designed to understand the
behavior of the American single-family residential investment industry
from Steve Murray of REAL Trends and Andrew Waite of NEXZUS Publishing
Group, former publisher of Personal Real Estate Investor Magazine. The
authors pioneered studying this market in 2007 when Murray, a real
estate brokerage consultant, questioned Waite about the market impact of
intentional investors on housing resales. At the time, investors were
considered an irritant to traditional real estate agents, yet little had
been done to quantify the amount of recurring business opportunity real
estate investment offered the real estate sales industry. After years of
industry expansion, and no subsequent industry wide surveys, polls, or
reports being published, the 2020 REI Group commissioned the authors of
the previous reports to embark on this new format. Adding a qualitative
aspect to the proven quantitate approach was a key factor to the mission
of the project.

To obtain the executive summary of the Iceberg Report, please visit https://www.propertymanagementfranchise.com/iceberg-report/.

About Real Property Management

Real Property Management is a franchise organization owned by Property
Management Business Solutions, LLC, a privately held corporation based
in Utah. With over 30 years of industry expertise, Real Property
Management offices provide full-service residential property management
for thousands of investors and rental home owners from more than 300
independently owned and operated locations throughout the United States
and Canada. For more information about Real Property Management or
property management services, please visit the following link: www.realpropertymgt.com.
For information on franchising opportunities, please visit www.propertymanagementfranchise.com.

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