9 types of rental property investors, and how property managers can attract and retain them

Robin Young
| 27 min. read
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Published on April 16, 2021

In the midst of the uncertainty that COVID-19 has caused for many owners over the last year, a growth story is emerging. Though some small-portfolio rental owners are still experiencing anxiety over the solvency of their properties, others are beginning to feel like they’ve adjusted to the COVID-19 rental market and are ready to grow.

Between our August 2020 and January 2021 surveys of hundreds of small-property rental owners, we saw an unprecedented increase in the number who plan to add new properties to their portfolios in the next 2 years. 38% of rental property investors now plan to grow in 2021 and 2022, while 49% plan to stay the same size—either by holding onto their current properties, or by replacing less profitable properties with new ones.

As the rental market enters this new cycle of growth, the relationships between property managers and rental owners will take on new importance. Property managers will be on the hunt for clients who need a professional’s help in running their properties efficiently and profitably, ensuring that owners can scale their operations and stay in compliance with regulations as they grow. Rental property investors and landlords will enlist property managers’ help in the areas where they lack time and expertise, allowing them to minimize risk and free up their schedules. Investors will seek out experts’ insights on the property types and markets that present opportunities in the next phase of pandemic recovery.

So, how can property managers convince rental owners of the value that they provide, then easily create strategies to address their clients’ diverse needs? We’ve created a framework for understanding clients on a deeper level, allowing property managers to move past a one-size-fits-all approach and identify the type of owners that they prefer to work with. In this post, we’ll explore each of the 9 types of small-portfolio rental owners that property managers are likely to encounter. For an even more in-depth look at rental owners’ goals, motivations, and pain points in 2021, download your free copy of The 2021 Rental Owners’ Report: Vol. 2.

Jump ahead to learn more about each investor type:

Rental Property Investor Type #1: The Intentional Investor

Who Are Intentional Investors?

Intentional Investors purchased rental property as an investment from the start. They’re the most likely to own multiple units and to be actively adding new properties to their portfolio, though some are more interested in profitability than growth. 48% of small-portfolio rental owners identify with this profile in 2021, an increase of 4 percentage points since 2018.

What Distinguishes Intentional Investors from Other Rental Owners

Intentional Investors are the most likely to:

  • Own multiple rental properties. The largest segment of Intentional Investors (46%) owns between 2 and 5 units. 25% only own one unit at the moment, but half of these single-unit Intentional Investors plan to add new properties to their portfolios in the next 2 years.
  • Own units in apartment buildings and multifamily homes. 41% of Intentional Investors own at least one unit located in a multifamily home, and 26% own at least one unit in an apartment building—more than either of the other investor types. However, single-family rentals remain the most popular type among all three investor types, with 62% of Intentional Investors owning at least one rental in this category.
  • Own rentals in urban neighborhoods. 38% of Intentional Investors own properties located in the city—more than the other two types of investors. Across the 3 investor types, though, most of the rental properties that our respondents own are located in the suburbs, with 52% of Intentional Investors owning at least one suburban rental property.
  • Own rental property as an active source of income. A majority of Intentional Investors (74%) own rental property as a passive source of income, as do a majority of our rental owner respondents. However, they’re also more likely than other investor types to own property as an active source of income (21%).
  • Be a full-time investor or landlord. Intentional Investors are more likely than other investor types to be full-time landlords (29%) or real estate investors (23%). However, as with the other 2 investor types, the largest segment of Intentional Investors have full-time jobs that are unrelated to their rental properties (47%) or are retired (34%).
  • Have plans to grow their portfolios in the next 2 years. Intentional Investors are the most likely of the 3 investor types to plan on adding properties to their portfolios in the next 2 years. 48% of Intentional Investors expect to expand their portfolios in 2021 and 2022—a higher rate than we’ve seen within this group in the previous 3 years, and an increase of 8 percentage points in the last 6 months.
  • Be acquiring new properties at a fast pace. Intentional Investors who are actively growing their portfolios are more likely than the other investor types to be growing at a fast pace. 32% of Intentional Investors who are actively acquiring new properties anticipate significant growth. However, a majority of those who are actively growing (68%) are content to add new properties at a slower pace over the next 2 years.

Intentional Investors are the least likely to:

  • Own rental property for sentimental reasons. Intentional Investors are least likely to own property for the personal reasons that are common among Accidental Landlords—for example, a property that they inherited or used to live in and aren’t ready to let go of.

How Property Managers Can Work Effectively with Intentional Investors

Determine the level of involvement they’d like to have regarding their properties. Some Intentional Investors want to be completely hands-off so they can focus on the investment side of the business, and want to equip their property manager to make decisions on their own. Others like to be actively informed and consulted along the way; so setting expectations regarding communication and decision-making can avert confusion or frustration.

Align your strategy with each client’s goals. Some Intentional Investors are focused on acquiring new properties. Others are content to stay the same size or even sell properties to ensure that their current ones are running profitably. Be sure to find out which metrics they use to define success so you know where to focus your efforts.

Share your rental market expertise. Even full-time investors feel overwhelmed by constant changes in regulations, local market performance, and leasing trends. For owners who are inclined to believe that they’re capable of running their properties on their own, your expertise on these matters is a major component of your value.

Encourage their growth by proving that you’ve got things under control. Particularly for the two-thirds of Intentional Investors who own properties in cities they don’t live in, it’s critical to help them feel confident that you’ll prevent and handle any issues at their properties while staying on top of the local market.

Provide them with insight into their individual properties and their overall portfolios. Many Intentional Investors want a detailed view of each property’s collections, maintenance expenses, and vacancies in addition to a more consolidated, big-picture view of their portfolio’s performance. They expect to be able to access this information on their own on a monthly basis.

For more insights into working with Intentional Investor clients, download your free copy of the 2021 Rental Owners’ Report: Vol. 2.

Rental Property Investor Type #2: The Accidental Landlord

Who Are Accidental Landlords?

Accidental Landlords came to own rental property for personal or circumstantial reasons—for example, a home that they inherited or used to live in, but weren’t yet ready to sell. They don’t consider themselves investors, and are extremely unlikely to plan on acquiring additional rental properties. 29% of small-portfolio rental owners identify with this profile in 2021, a decrease of 4 percentage points since 2018.

What Distinguishes Accidental Landlords from Other Rental Owners

Accidental Landlords are the most likely to:

  • Own a single unit. 84% of Accidental Landlords own just one rental property—a much higher percentage than the other two investor types.
  • Be retired. 42% of Accidental Landlords are retired, though just as many have full-time jobs that are unrelated to their rental properties. 21% consider themselves full-time landlords.
  • Consider selling their property in the next 2 years. Most Accidental Landlords expect to hold onto their rental property through 2022. However, of the 3 investor types, Accidental Landlords are the most likely to consider selling off their rental property in the next 2 years (38%). Since the vast majority own just a single property, this suggests that nearly 2 in 5 Accidental Landlords are thinking of leaving the rental market altogether.
  • Own rental property for sentimental reasons. A majority of our respondents own rental property as a passive source of income; and 43% of Accidental Landlords own rentals for this reason. However, they’re also more likely than other investor types to own property for sentimental reasons (22%) or because they’re waiting for a good time to sell (21%).
  • Hire a property manager because they no longer live near their rental property. Nearly 4 in 5 Accidental Landlords say that distance was their primary motivator in hiring a property manager; while 2 in 5 hired one to help manage their residents, or for assistance in maintaining their properties. 1 in 5 wanted an expert’s help with accounting, or staying compliant with changing regulations and dealing with legal challenges.
  • Plan on moving into their rental property in the future. 21% of Accidental Landlords say they’re renting out their property until they’re ready to move into it—for example, a vacation home where they plan to live once they retire.

Accidental Landlords are the least likely to:

  • Be interested in acquiring new rental properties. Just 16% of Accidental Landlords plan to expand their portfolios in the next 2 years, though this represents an unprecedented increase of 10 percentage points in just 6 months.
  • Own units in apartment buildings and multifamily homes. The most common property type among Accidental Landlords is single-family rentals, of which 65% of Accidental Landlords own at least one. They’re the least likely of the 3 investor types to own units in apartment buildings (14%) or multifamily homes (29%).
  • Own rental property as a source of income. Though a majority of respondents of all 3 investor types own rental property for the income it generates, Accidental Landlords are the least likely to own rental property primarily as a passive or active source of income.

How Property Managers Can Work Effectively with Accidental Landlords

Ask what their property means to them. For some Accidental Landlords, their rental property represents their retirement. For others, it’s a home that they or a beloved family member once lived in. You’ll find it easier to satisfy these clients if you learn the emotional considerations that underlie the decisions they make for their property.

Don’t forget that their property is also a passive source of income. Though sentimental reasons are common among Accidental Landlords, 1 in 2 own rental property for the income it provides. This means that it’s important to balance empathy and practicality in your approach to managing their properties, particularly if they or their residents are experiencing financial instability during COVID-19.

Seek to solve their 3 greatest sources of stress. Nearly half of Accidental Landlords are retired, and just as many have a full-time job that’s unrelated to their rental property. For these owners, day-to-day issues at their rental properties may be the last thing they want to think about. Find out the pain points they’re hoping to address by hiring a property manager—such as chasing down rent payments, filling vacancies with high-quality tenants, and addressing maintenance requests—to understand how they’ll evaluate your success.

Give them peace of mind from afar. 77% of Accidental Landlords who work with a property manager do so because they don’t live near their rental property. It’s critical to reassure these owners that you’re there to prevent and handle any issues that arise with their property or their residents. In addition, it’s important to assure them that you have the expertise to run their properties in compliance with changing regulations and pandemic guidance in your area.

Find out whether selling is on their mind. 38% of Accidental Landlords are considering selling their property in the next 2 years. By finding this out early on, you can help them to think through the pros and cons, position their property for sale, and refer them to other real estate professionals in your network—all of which could generate revenue for your business.

For more insights into working with Accidental Landlord clients, download your free copy of the 2021 Rental Owners’ Report: Vol. 2.

Rental Property Investor Type #3: The Unintentional Investor

Who Are Unintentional Investors?

In 2018, Unintentional Investors emerged from Buildium’s survey data as a category of rental owners distinct from Intentional Investors and Accidental Landlords. Like Accidental Landlords, they came to own rental property for circumstantial reasons; but they now consider themselves investors, and 43% plan to add new properties to their portfolios in the next 2 years. 24% of small-business rental owners identify with this profile in 2021, an increase of 8 percentage points since 2019.

What Distinguishes Unintentional Investors from Other Rental Owners

Unintentional Investors are the most likely to:

  • Own a single-family rental. Like the other 2 investor types, a majority of Unintentional Investors (66%) own at least one single-family rental. They’re also more likely than Accidental Landlords, but less likely than Intentional Investors, to own units in multifamily homes (35%) and apartment buildings (24%).
  • Own rental property as a passive source of income. A majority of Unintentional Investors (82%) own rental property as a passive source of income, as do most rental owners.
  • Hire a property manager because they don’t want to manage residents or maintenance on their own. 45% of Unintentional Investors report wanting a property manager’s help in managing their residents, and 42% want help in maintaining their properties. Distance remains the most common reason that rental owners decide to enlist a property manager’s help, but Unintentional Investors are far less likely than the other investor types to hire a property manager because they don’t live near their rental properties. They’re more likely to want an expert’s help in staying compliant with changing regulations and dealing with legal challenges (23%) or in managing their books (22%).
  • Have a full-time job that’s unrelated to their rental properties. Most Unintentional Investors (56%) have a full-time job that’s unrelated to their rental properties. Smaller numbers of Unintentional Investors are retired (28%), or identify as full-time landlords (25%) or real estate investors (16%).
  • Own property within a homeowners association. Unintentional Investors are the most likely to own properties within homeowners associations (44%), though this is common among the other investor types as well.
  • Acquire new properties at a slow pace. Unintentional Investors are nearly as likely as Intentional Investors to be actively growing their portfolios (43%), but are far more likely to be acquiring new properties at a slow pace.
  • Have rentals located in the suburbs. Like other investor types, a majority of Unintentional Investors (61%) own properties located in the suburbs, though this group does so at the highest rate.

Unintentional Investors are the least likely to:

  • Have plans to sell their rental properties in the next 2 years. Unintentional Investors are the least likely of the 3 investor types to have plans to sell off any of their properties over the next 2 years (27%) or to downsize their portfolios (7%).

How Property Managers Can Work Effectively with Unintentional Investors

Find out their short- and long-term goals. Some Unintentional Investors are focused on increasing their properties’ profitability or shoring up their retirement savings. Some are eager to acquire additional properties, while others are hesitant to make this leap during the uncertainty of a pandemic and recession. Your expertise as a property manager is invaluable for owners making these kinds of decisions. Finding out whether their portfolio represents an active or passive source of income, or whether they’re interested in expanding, will enable you to guide them in the right direction.

Fill in the gaps in their expertise. Many Unintentional Investors hire a property manager because they’re aware that they lack the expertise to run their properties profitably, efficiently, and in compliance with changing regulations and pandemic conditions. They may feel comfortable managing their residents, but not in managing their properties’ maintenance or accounting. Others want to get resident-related issues off of their plates so they can focus on growing their portfolios. With these clients, you can prove your value by demonstrating your professional expertise in the areas where they’re still learning.

Determine how much communication and involvement they want. Some Unintentional Investors are eager to get their hands dirty when it comes to property operations, while others prefer to focus on their investments. Most have full-time jobs that occupy a majority of their time. Be explicit in asking how often your clients want to receive updates on their properties and on which topics they’d like to be consulted, versus those that they’d be happy to let you handle on your own.

Connect them with high-quality vendors. One common request from Unintentional Investors is that their property manager provide a list of local providers to help with preventative maintenance, repairs, and renovations. Many also wish that their property manager could advise them on buying and selling rental properties. Whether they’re looking for a contractor or broker, you can generate revenue for your business by referring clients to the high-quality professionals in your network—or by providing these services yourself.

Help them understand their properties’ finances. Nearly all Unintentional Investors own rental property primarily as a passive source of income; but many are still learning the ins and outs of real estate investing, accounting, and bookkeeping. You’ll be invaluable to your clients if you do more than sending over a basic financial report once a month—many will be eager for your opinion on opportunities to improve their properties’ profitability and efficiency.

For more insights into working with Unintentional Investor clients, download your free copy of the 2021 Rental Owners’ Report: Vol. 2.

The 6 Subtypes of Rental Property Investors & Landlords

In addition to the 3 investor types, we discovered 6 subtypes of rental property investors and landlords. You can get the data on what their portfolios look like, what their goals and pain points are, and what they expect from property managers in the 2021 Rental Owners’ Report: Vol. 2.

The Growth-Focused Investor

Growth-Focused Investors are rental owners who identify as investors and are actively acquiring new properties. 31% of small-business rental owners fit this profile in 2021—an increase of 10 percentage points over the last 6 months as investors’ interest in acquiring new properties has risen sharply. A majority of Growth-Focused Investors identify as Intentional Investors.

The DIY Landlord

DIY Landlords are rental owners who are running their rental properties without the assistance of a property manager. 31% of small-business rental owners fit this profile—a decrease of 6 percentage points during COVID-19 that mirrors the increase in the number of rental owners who have hired a property manager. DIY Landlords most often identify themselves as Intentional Investors.

The Single-Unit Owner

Single-Unit Owners are rental owners who own a single unit and have no plans to grow in the near future. 29% of small-business rental owners fit this profile—a number that has largely held steady during COVID-19—of which a majority identify as Accidental Landlords.

The Absentee Landlord

Absentee Landlords are rental owners who need a property manager’s help in looking after their rental property because they no longer live nearby. They aren’t actively acquiring new properties. 21% of small-business rental owners fit this profile—a number that has largely held steady during COVID-19—of which the largest segment identify as Accidental Landlords.

The Distance Investor

Distance Investors are rental owners who are actively growing their portfolios and need a property manager’s help in looking after the rental properties they don’t live near. 11% of small-business rental owners fit this profile—an increase of 5 percentage points during COVID-19. A majority of Distance Investors identify themselves as Intentional Investors.

The Profit-Conscious Investor

Profit-Conscious Investors are rental owners who want a property manager’s help in increasing their properties’ profitability. 7% of small-business rental owners fit this profile—a number that has largely held steady during COVID-19. A majority of Profit-Conscious Investors identify themselves as Intentional Investors.

The 2021 Rental Owners’ Report

Our annual 2021 Rental Owners’ Report reveals more of the insights we’ve gained from our recent surveys of small-business rental owners and investors:

  • Volume 1 explores the opportunities that property managers have to better serve their current customers and win the business of the rental owners growing tired of navigating the complex landscape of regulations, profitability, and pandemic guidance on their own.
  • Volume 2 details how property managers can encourage their current clients to grow; attract new clients that fit their business model; and win more referrals by understanding the wide variety of goals, motivations, and pain points that rental owners have in 2021.

Be sure to download your free copy of the 2021 Rental Owners’ Report now!

2021 Rental Owners' Report | Buildium

Read more on Industry Intel
Robin Young
Robin Young

As Buildium’s Senior Researcher, Robin leverages her background in social science research and interest in real estate economics to identify trends in the rental market. She combines intensive market research with insights gleaned from surveys of renters, property managers, and rental owners to examine topics like shifting renter demographics, the housing affordability crisis, and the transformation of property management during COVID-19.

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