Single Family Rental investments have been growing hugely in popularity over the past 12 months, with what was a small niche of the property investment market now becoming one of the fastest growing areas.
In addition to investors’ interest in Build-to-Rent style properties in city centres to cater for the young professional’s lifestyle, more and more demand for larger homes for families in the suburbs is driving growth in the SFR market.
Housebuilders looking to head off turbulent market conditions are selling portions and entire estates off to institutions. We have seen a lot of market activity with the likes of Gatehouse Bank’s sale of the Thistle Portfolio to Goldman Sachs, Apache Capital’s SFR fund launch, and Sigma Capital’s sale to Six Bidco.
However, as investors are turning to a different corner of the market, the management of such portfolios poses different challenges to those found with city centre BTR properties.
What is Single Family Rental?
Many investors and developers have been focussing on city centre housing blocks targeted at the young professional market, which usually involves purchasing a single block that is divided into multiple 1-2 bedroom flats. Single Family Rental instead involves buying a number of individual family-sized single houses, with one tenancy per property.
Why is demand for SFR growing?
In the past 18 months, when COVID-19 related restrictions meant that people were required to stay in their homes, many renters began to place a higher value on outdoor spaces, larger living areas, and of living outside of busy city centres.
Additionally, the number of renters overall is increasing, with a quarter of the UK’s housing market expected to be made up of private rental properties. Those who aren’t in a position to get onto the property ladder are now looking for rental accommodation suitable for starting families, spreading out, and benefiting from more garden space.
With this growth in demand has come a rise in investors buying housing estates and individual housing properties in order to offer high quality Single Family Rental housing.
As well as the upshoot in the demand, single family rental properties offer several investment benefits. As they’re often located on the outskirts of larger cities with strong commuter links, it’s likely they’re going to be subject to faster appreciation.
Additionally, families, as opposed to professional couples or single tenants, are less likely to move regularly, preferring stability and continuity while they raise they families. This means longer tenancies and fewer void periods.
Managing multiple properties requires Single Family Rental software capable of handling the increased asset management requirements associated with managing multiple properties, as well as detailed and customisable reporting and investment modelling capabilities.
Detailed and granular asset management is a must when dealing with multiple properties. The ability to track and maintain components across a portfolio of properties requires SFR software built for the purpose, with the capability to view performance both as individual properties and across the whole portfolio. With MRI software, it’s possible to personalise how data on assets is stored to include custom fields, allowing property managers to be incredibly granular as well as view overall performance across a group of properties.
As we’re seeing many of the investors in SFR being funds or capital partners as opposed to developers, clear and bespoke reporting on assets is vital, to enable all stakeholders to track and make decisions based on the performance of assets and housing stock. With MRI software, reports are fully customisable, meaning you can extract any data necessary to ensure that investors and partners are able to gain a full view of the property portfolio as well as individual properties.
Investment modelling is also important when working with multiple properties. Having Strategic Planning software which allows specific modelling of scenarios for improvements and investments in your portfolio using data analytics means that stakeholders can test out multiple options and make informed decisions on future business plans. MRI’s strategic planning solutions offer modelling functionality, allowing for multiple properties and various funding scenarios.
Ensuring properties are safe and properly managed is equally as important for SFR housing as BTR city centre blocks. With the right property management software, you can be sure not only that your tenants are receiving high quality service and accommodation, but also that investments are made with full information, and components and assets are managed to ensure the best ROI for stakeholders.
At MRI, our software solutions provide flexible, open, and integrated platforms to ensure your property portfolio is managed effectively. Take a look at our MRI Living brochure to learn about our dedicated residential solutions.