We looked at nine key states* to see how many homes are owned by four big single family rental companies (Invitation Homes, Progress Residential, Cerberus, and American Homes for Rent). Atlanta came out on top, popular across the board with all four companies.
Atlanta’s number boosted by merger of IH and Starwood Waypoint in 2018
Despite these large numbers, the combined total holdings of these four companies never accounts for more than 2% of the built stock of single-family homes (in the case of Atlanta). Even if we look at entry-level homes only, the highest percentage is Jacksonville, where 3.7% of affordable homes are owned by one of these four companies.
What areas do they buy in?
Let’s drill down to the ZIP code level. Below, we show Atlanta, GA and Florida’s I-4 corridor as examples. Certain areas are clearly more popular than others. There is a ring around Atlanta, with a “donut hole” in the middle where few properties are owned. Many of the homes are in Atlanta’s growing fast-growing outer suburbia. We will later examine which areas might have higher vacancy.
A similar formation surrounds Tampa and Orlando with an almost unbroken string of holdings along Interstate 4 between the two metros.
We can even show differences in where each company invests. Let’s see the differences between Invitation Homes and Progress Residential in Atlanta. Overlaying this with your own holdings, you know who your competitors are — and aren’t. Let’s compare Invitation Homes and Progress Residential, starting with Invitation Homes:
Progress Residential has a higher emphasis on areas in the far south:
Measuring performance using availability rate
By dividing active listings by total holdings, we can get to an availability rate. A high availability rate means that a large percentage of the homes are currently listed on the market, while a low availability rate means that very few of them are on the market – presumably because they are leased out.
This is probably the closest we can get to an actual vacancy rate without knowing what is happening with physical occupancy.
Below is an example comparing the availability rates for American Homes for Rent and Invitation Homes. Others we track include Cerberus, Progress Residential, and more.
Availability rate is a great indicator of the health of each market. A figure below 5% is quite strong. A 5% threshold is commonly used in commercial real estate to describe a strong office or multifamily market, and the same could be said for single family rentals.
Some have pointed out that the availability rate could be affected by a large number of houses coming up for renewal around the same time. This could happen if they were acquired around the same time. To help smooth this out, we can average the availability rate out across a few months. We can also compare the performance of the different single family rental (SFR) companies.
Availability by ZIP code
By looking at this at the ZIP code level, we can see specific areas that have a glut of listings, or a shortage. While the availability rate is around the metro average in many locations, some areas stand out as higher.
By tracking these, we can see which areas may be oversupplied with rentals. Based on this, you may, as an investor, decide to drop rents to fill those units more quickly.
You may also slow want to down the pace of acquisitions in areas that have too much availability.
*The nine key states are AZ, CO, UT, TX, TN, GA, FL, NC, SC.
