Single family home rental trend benefits property managers

Geoff Roberts
Geoff Roberts | 2 min. read

Published on May 7, 2013

Low mortgage rates aren’t enough to tempt some young people to buy a home. Instead, they’re opting to rent one. In Memphis, for example, property management companies like Lubin Property Management LLC and Renshaw Property Management are seeing big growth in single family rental homes.

“Young home renters have been our biggest area of growth,” Ryan Lubin of Lubin Property Management LLC told The Daily News in Memphis. “Even with mortgage rates low, we are seeing more demand for rentals from the 23 to 35 age group than any other group.”

Why the trend? Some experts are citing high student loan debt, while others point to macroeconomic uncertainties. Another reason young people prefer to rent a home instead of buying one is that they want to live in an area first.

In many areas of the country, investors are buying and rehabbing single-family homes that they turn around and rent out in order to meet the surging demand. This is big business — a $10 billion business, reports Bloomberg Businessweek.

According to new research by IBISWorld, property managers stand to benefit from this home rental trend:

Private equity firms and other large investors typically do not directly manage the day-to-day operations of the houses they buy. Instead, they outsource property upkeep and tenant relations to property managers, who currently derive about 63.8% of their revenue from the residential market. However, this market largely comprises the management of multifamily apartment buildings, rather than single-family homes; as such, these operators will shift slightly toward managing groups of homes, opening up a niche service segment for some property managers.

IBSIWorld projects 6.0% revenue growth for the property management industry in 2013 due to the wider U.S. housing recovery.

If you’re a property manager, have you seen increased demand for professional management of single family rental homes? Please share your story in the comments below.

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Geoff Roberts

Geoff is a marketer, surfer, musician, and writer. He lives in San Diego, CA.

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