Comparing the Market Positioning of Big SFR Operators

Steven McCord

By Steven McCord

Co-founder and CEO of Spatial Laser, the company behind Locate Alpha.

March 01, 2022

As the single-family rental (SFR) market becomes more competitive, every investor must clearly define their positioning. First, this means deciding whether to target exurban areas, or older close-in-suburbs. Also, they must decide what type of product to offer: how many square feet, how many bedrooms, and at what rent level. The Locate Alpha team looked at 4,000 active listings by national SFR (single family rental) operators around the country in late February 2022. We took Invitation Homes (IH) and American Homes for Rent (AH4R) as examples, examining their active listings in all national markets. The locations of the listings are summarized below.

Source: Operator websites, Spatial Laser analysis

What we found

We know that most of the homes are in suburbs. But is there a difference in the kind of suburb – mature, high density suburbs vs lower-density exurbia?

Invitation Homes has a slight bias towards more dense locations than American Homes for Rent, with a higher presence in areas categorized as moderately or highly dense suburbs. American Homes for Rent leans slightly toward low-density, fringe locations, with nearly three-quarters of listings in such areas.

Source: Operator websites, Invitation Homes website

Product differences

Houses from both operators had similar numbers of bedrooms. Three and four-bedroom homes were overwhelmingly popular, together comprising 91-94% of listings. While a few five-bedroom homes were available, two-bedroom listings were almost completely absent.

Source: Operator websites, Spatial Laser analysis

Rent Differences

Differences in asking rents were more apparent. The light grey bands show the most important part of the range between the 10th to 90th percentiles. Anything outside of the grey box can be considered a relative outlier. The darker shaded boxes are the center of the distribution — the 30th and 70th percentiles.

The median Invitation Homes property was listed for 305 dollars more than the median American Homes for Rent property. This is likely due to the expensive homes in the Seattle part of the IH portfolio.

Source: Operator websites, Spatial Laser analysis

Let’s look at a few metro areas in the Sunbelt region. Most of the Tampa homes for IH were in a different rent range than A4HR, but in most metro areas there was a lot of overlap.

Source: Operator websites, Spatial Laser analysis

The size of the homes showed some differences as well, but not as much as with rent. The IH homes tended to be slightly smaller.

Source: Operator websites, Spatial Laser analysis

In the key Sunbelt markets, the sweet spot tended to be around 2,000 square feet.

Source: Operator websites, Spatial Laser analysis

Income and Growth Differences

Are the two companies operating in different income level neighborhoods? In some cities, yes.

We noticed and 7-9K difference in median household income levels in Atlanta, Tampa, and Charlotte between the two companies’ listings, but not much of a difference in Dallas, Houston, or Phoenix.

We do see differences with the ranges. In Houston, American Homes for Rent, and, to a lesser, extent, Invitation Homes, did have quite a few listings in high-income areas.

Source: American Community Survey, Operator Websites, Spatial Laser analysis

Are these companies buying in areas of high growth? We have a useful way to calculate this, by looking at the expected number of new households over the next five years, within a mile. The higher this number is, the more growth is on the way.

Both companies seemed to be in high-growth areas in Phoenix, and to some extent, in Tampa, while most of the houses seemed to be in consistently in more moderate growth areas in Atlanta and Charlotte.

Source: Utility and postal estimates, operator websites, Spatial Laser Analysis

Steven McCord

By Steven McCord

Steven is the co-founder and CEO of Spatial Laser, the company behind Locate Alpha. Steven also enjoys investing in single-family homes. He can be reached at Locate Alpha helps single-family home buyers find the perfect place to invest, in minutes, using detailed location data.

About Locate Alpha

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