Anyone here have any firsthand knowledge/experience with REITs focused on single-family homes?

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workingovertime
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Anyone here have any firsthand knowledge/experience with REITs focused on single-family homes?

Post by workingovertime »

Looking for inputs from those who either worked in this industry extensively or just have a lot of specialized knowledge in REITs focused on single-family homes.

For example, I'm curious about your thoughts on the pros and cons of REITs focused on single-family homes as opposed to apartments. It seems like more of the major publicly-traded REITs are focused on apartments. I thought about this and I guess it makes sense (?) because one would think that REIT can better leverage their resources into a more consolidated investment (i.e. apartment) rather than having to continually research and invest into individual single-family homes? Does this logic make sense? Also, do you even think that REITs focused on single-family home is even a good business platform? It looks like too many smaller transactions along with all of its efforts and it might be better spent on large apartments or something more consolidated. In contrast, there are already many successful REITs focused on single-family homes. Are they just those few survivors or just have exception management? Lastly, do you have major doubts about REITs for single-family homes? Are you an advocate? Either way, why?
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David Jay
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Re: Anyone here have any firsthand knowledge/experience with REITs focused on single-family homes?

Post by David Jay »

workingovertime wrote: Mon Nov 29, 2021 2:09 pmIt seems like more of the major publicly-traded REITs are focused on apartments. I thought about this and I guess it makes sense (?) because one would think that REIT can better leverage their resources into a more consolidated investment (i.e. apartment) rather than having to continually research and invest into individual single-family homes? Does this logic make sense?
Makes sense to me. The single-family rental market is very distributed.
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Watty
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Re: Anyone here have any firsthand knowledge/experience with REITs focused on single-family homes?

Post by Watty »

workingovertime wrote: Mon Nov 29, 2021 2:09 pm Lastly, do you have major doubts about REITs for single-family homes?
The house behind my house is owned by a major REIT like that.

I had a lot of problems with getting them to clear out some trees that fell and were helter-skelter in their backyard after a big storm last fall. There were about a half a dozen trees so it was an obvious problem but fortunately they did not fall onto my property.

In addition to being an eyesore they were dangerous since a kid might have been tempted to climb on them like a jungle gym.

We know the renters and they are nice and were trying to get it cleaned up along with some other maintenance problems but they were not having any luck either.

I eventually sent several certified letters to the CEO and several officers stressing the dangerous attractive nuisance aspect of the trees. Basically I was trying to put them into a position where they could not count on their insurance covering them if someone was hurt on the trees since it was a known problem that they were ignoring.

I did not hear anything back about that but about four months later they had a crew in to take out the downed trees. I was talking to the forman and he said something about them doing it because it was a hazard for kids so apparently my letters worked.

Anyway one thing to look into with a REIT like that is if they are properly maintaining the homes. I suspect that a lot of them are being poorly maintained to make the current numbers look better but eventually that will be a problem that they will have to fix.
TropikThunder
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Re: Anyone here have any firsthand knowledge/experience with REITs focused on single-family homes?

Post by TropikThunder »

workingovertime wrote: Mon Nov 29, 2021 2:09 pm REITs focused on single-family homes
Didn't Zillow try that? :twisted:
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workingovertime
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Re: Anyone here have any firsthand knowledge/experience with REITs focused on single-family homes?

Post by workingovertime »

TropikThunder wrote: Thu Dec 02, 2021 8:44 pm
workingovertime wrote: Mon Nov 29, 2021 2:09 pm REITs focused on single-family homes
Didn't Zillow try that? :twisted:
Right, although I just don't understand how they made such a massive loss (according to the news) in the current market. I feel like it has to be attributed to be really poor management. I mean, I feel like you have to be really bad to incur losses in residential housing market right now. Either that or they had some stupid overhead costs. Just bad management either way but I obviously these are just my guesses so who knows. Maybe their most recent 10-K or 10-Q explains this.
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peskypesky
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Re: Anyone here have any firsthand knowledge/experience with REITs focused on single-family homes?

Post by peskypesky »

workingovertime wrote: Fri Dec 03, 2021 8:17 am
TropikThunder wrote: Thu Dec 02, 2021 8:44 pm
workingovertime wrote: Mon Nov 29, 2021 2:09 pm REITs focused on single-family homes
Didn't Zillow try that? :twisted:
Right, although I just don't understand how they made such a massive loss (according to the news) in the current market. I feel like it has to be attributed to be really poor management. I mean, I feel like you have to be really bad to incur losses in residential housing market right now. Either that or they had some stupid overhead costs. Just bad management either way but I obviously these are just my guesses so who knows. Maybe their most recent 10-K or 10-Q explains this.
Zillow was overpaying for homes, outbidding everyone and going way over asking prices:
https://therealdeal.com/2021/11/03/what ... d-for-one/
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Re: Anyone here have any firsthand knowledge/experience with REITs focused on single-family homes?

Post by Sandtrap »

workingovertime wrote: Mon Nov 29, 2021 2:09 pm Looking for inputs from those who either worked in this industry extensively or just have a lot of specialized knowledge in REITs focused on single-family homes.

For example, I'm curious about your thoughts on the pros and cons of REITs focused on single-family homes as opposed to apartments. It seems like more of the major publicly-traded REITs are focused on apartments. I thought about this and I guess it makes sense (?) because one would think that REIT can better leverage their resources into a more consolidated investment (i.e. apartment) rather than having to continually research and invest into individual single-family homes? Does this logic make sense? Also, do you even think that REITs focused on single-family home is even a good business platform? It looks like too many smaller transactions along with all of its efforts and it might be better spent on large apartments or something more consolidated. In contrast, there are already many successful REITs focused on single-family homes. Are they just those few survivors or just have exception management? Lastly, do you have major doubts about REITs for single-family homes? Are you an advocate? Either way, why?
Historically, AFAIK, IMHO, (10 disclaimers with no initials): SFH residential income property has the highest SPF (single point of failure) and returns metric per dollar than other forms of "residential" (not commercial) income property investments. Though highly unique per area, location, etc, (more dis laimers), when there are multiple rental units "under roof", the returns percentage per dollar invested increases and the costs/expenses are amortized better.
IE: the cost/expense per "door" of a SFH can be enormouse vs a concrete 12 unit 2 story walkup well built. (per "door" costs) or (per "door" ROI net).

For example: SFH vs Duplex vs Fourplex vs 12 units in a single 2 story walkup apartment building vs 50 units in a 10 story high rise apartment building, and so forth. (single condo/townhouse units in a multi unit development can be even lower than a sfh but it depends (more dislaimers).

do you have enough money to invest in a single rental unit on your own?

I would suspect that most REIT's have a diversified holding portfolio that includes SFH rentals but doubt that they would specialize in SFH for the above reasons.

j :D
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