Single-family rental (SFR) homes have turned into housing’s sexiest phenomenon, according to Emerging Trends in Real Estate 2022, an annual report published by PwC and the Urban Land Institute.
In previous decades, the majority of renters lived in urban apartments or simply could not afford to buy homes. However, in the past 5 years, the demand from tenants for single-family homes in the U.S. has been driven by both financial necessity and choice.
Today, SFRs and build-to-rent (BTR) communities are on the radar screens of mom-and-pop investors, real estate investment trusts (REITs), institutional investors, and private equity funds. The flow of investment capital into the SFR asset class is creating demand for new business models and digital tools to innovate and transform the real estate industry.
Let’s take a closer look at 10 companies innovating in the SFR space.
- SFR property is one of the most appealing investments today, attracting capital from both private and institutional investors.
- Top companies in the SFR space are making remotely investing in rental property easier and providing property technology services like financial software and end-to-end services for property services management.
- Companies innovating the SFR space include Roofstock, Stessa, Invitation Homes, and John Burns Real Estate Consulting.
10 companies innovating the SFR space
Here are 10 companies transforming the SFR space by making investment real estate cost-effective and straightforward and providing proptech and research for SFR investors.
Roofstock is an online marketplace where investors can buy and sell SFR homes in more than 70 of real estate markets in the U.S. The Roofstock platform is used by individual investors looking to buy their first rental property and institutional investors seeking to buy, build, or sell SFR portfolios. In addition, through Roofstock One, the company offers accredited investors innovative Tracking Stocks – a fully managed, passive SFR investment opportunity.
Since its launch in 2015, investors have completed more than $5 billion in transactions using Roofstock’s state-of-the-art technology and information services to remotely invest in rental properties. Buyers can search for property and perform due diligence, negotiate an offer, get preapproved for financing from third party lenders , and request referrals to local property management companies by Roofstock—all entirely online.
Stessa, a Roofstock company, is a simple yet powerful tool that helps real estate investors effectively manage their properties —for free. The company provides a simple software solution for investors to track income and expenses automatically and generate key financial reports, such as income and cash flow statements, real estate balance sheets, tenant rent rolls, and tax-ready financials.
More than 100,000 investors use Stessa to track the financial performance of over 250,000 properties with a combined asset value of more than $60 billion. The company was founded in 2015 with a mission of providing powerful, cost effective resources to real estate investors and was acquired by Roofstock in 2021.
Mynd is a tech-enabled property management firm focused on the rental sector. The company was founded in 2016 to provide property management software to investors with portfolios of SFRs spread across the country. Today, Mynd offers real estate investors an end-to-end platform to find, finance, buy, manage, and sell residential investment properties remotely.
Rather than outsourcing services to local partners, Mynd does everything in-house, making it possible to invest in 25 cities via a desktop interface or mobile app. The company also manages over 9,000 rental units and plans to expand to 15 additional markets over the next 3 years.
4. Invitation Homes
Invitation Homes is the largest landlord of SFRs and offers a publicly traded REIT on the New York Stock Exchange. The company made its first home purchase in 2021 and today owns and operates a portfolio of more than 80,000 rental homes in the Western and Southeastern U.S., Texas, and Florida.
When choosing areas in which to invest, Invitation Homes targets desirable neighborhoods in convenient proximity to major employment centers, good schools, and transportation corridors, according to the company’s website. Invitation Homes currently has a market cap of $25.31 billion and offers shareholders a dividend yield of 2.12% (as of March 30, 2022).
5. Home Partners of America
Home Partners of America (HPA) is a private REIT specializing in the rent-to-own sector and operates in 49 metropolitan areas in the U.S. The company also offers a path to homeownership by purchasing homes for tenants, leasing them back, and offering the opportunity to buy the homes at a predetermined price.
HPA manages a portfolio of more than 17,000 SFR homes in the U.S., with the goal of expanding affordable housing via its choice lease program to qualifying low- and moderate-income residents. HPA was acquired by the investment management company Blackstone in 2021 for $6 billion.
6. Lofty AI
Lofty AI is an artificial intelligence app company focused on offering tokenized real estate properties and homes in the U.S. Investors can purchase fractional investments via the Algorand blockchain for as little as $50 in less than 5 minutes. Rental income is distributed daily, and token holders receive real estate tax benefits and deductions, such as depreciation.
Property tokens can be bought and sold anytime. Token holders vote on all property decisions, such as making a capital repair or evicting a tenant, and properties are managed by a third-party property management company. Lofty AI was founded in 2018, has sold nearly 281,000 tokens for a total investment value of more than $17 million, and has generated over $296,000 daily investor returns since May 2021.
7. John Burns Real Estate Consulting
John Burns Real Estate Consulting provides independent research and consulting services to the U.S. housing industry. The firm was founded in 2001 and works with many of the largest SFR operators and investors, builders and developers, and private equity and institutional investors.
In partnership with the National Rental Home Council, John Burns Real Estate Consulting publishes the Single-Family Rental Survey, a first-of-its-kind resource to serve as the definitive gauge of professionally managed SFR rental conditions. The firm also offers a variety of research subscriptions and services, custom consulting services, and specialized reports for SFR operators and investors.
PlanOmatic is a tech-enabled services company providing quality photos, floor plans, and 3D images to SFR owners and operators, property management companies, iBuyers, and real estate agents. According to John Burns Real Estate Consulting, 4-bedroom rental homes photographed by PlanOmatic rent for an average of 10% more.
The company was founded in 2005 to help SFR owners and operators quickly grow and scale SFR portfolios and smoothly run operations and marketing workflows through the entire property lifecycle. PlanOmatic provides real estate photography and property insights, turnkey data solutions for SFR owners and operators in the top rental investment markets from coast to coast.
SmartRent is a publicly traded company that develops smart home products and solutions to empower SFR owners and operators, property managers, homeowners, and home builders to maximize efficiency and increase convenience.
Products include self-guided tours for prospective residents, asset protection via smart homes devices for faster repairs, and customized solutions for rental property owners. SmartRent was founded in 2017, received over $100 million in funding from backers, including venture capital firm Fifth Wall and Innovation Homes, and went public in 2021.
Lessen is a property technology platform that connects property owners to a nationwide network of more than 1,000 vetted professionals in nearly 30 markets for renovation, maintenance, cleaning, and tenant turn services. Products include a single end-to-end platform for property services management, centralized project and work order management, integrated dashboards, billing, and analytics.
Since being founded in 2019, Lessen has been used by clients who in total have more than 400,000 doors to complete more than 6,000 jobs. The company recently raised $170 million in series B funding led by Fifth Wall, giving Lessen a valuation of more than $1 billion.
SFRs account for more than 33% of all renter households, according to the National Multifamily Housing Council, and the amount of investment capital flowing into the SFR space continues to grow. As the demand for SFRs from investors and tenants increases, property technology is leading the way to simplify the process of owning and operating SFRs.