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From Expansion to Efficiency: How SFR Operators Are Thriving in a New Market Reality

The years leading up to the COVID-19 pandemic were an era of growth for the single-family rental (SFR) industry. As institutional SFR investors quickly expanded by investing in distributed portfolios and developing build-to-rent (BTR) communities, shifting lifestyle trends pushed demand and rents upward. Over the past two years, however, challenges stemming from interest rates and economic uncertainty have curbed rent growth, according to CoreLogic, and made it difficult to finance new investments and developments.

As a result, SFR owners and operators are looking internally for value creation, prioritizing optimizing revenue and cutting operating expenses as they navigate market turbulence. In their quest to boost net operating income (NOI), many SFR owners are leveraging technology to streamline and centralize nearly every aspect of property management, from leasing and sales to maintenance and turns.

Tackling SFR Management Challenges
Of course, this embrace of technology-driven operations is not new for SFR. As an asset class that really gained steam in the digital era, SFR has consistently embraced technological solutions to enhance efficiency and improve operational outcomes.

Institutional SFR emerged after the Great Financial Crisis; amid the wave of foreclosures, major investors took advantage of favorable market conditions to quickly create and scale SFR portfolios. Technically, SFR had existed as an asset class for mom-and-pop investors for many decades, but these smaller operators were slower at tech adoption. With the proliferation of major institutions entering the space, SFR tech quickly began maturing. Over the past few years, SFR owners have been leveraging technologies to optimize their management processes, especially when it comes to leasing and resident communications.

Still, there are several pain points specific to SFR that these owners need to solve. One key challenge is the geographically dispersed nature of SFR portfolios, which makes managing these properties inherently tricky. SFR properties also lack the onsite staff typical within multifamily, meaning property service tasks that require significant coordination and legwork are even more difficult to manage.

For SFR owners, the maintenance and management of individual properties can cause a huge logistical headache — and can run up costs if not handled efficiently.

Streamlining Maintenance Via Centralization
The real estate industry has experienced a significant shift toward centralization in recent years, and this growing trend has major, positive implications for SFR management. Historically, real estate managers handled pricing, incentives and other decision-making on a local or regional basis. Now, with recent technological innovations, they can all be done from one headquarters for an entire company, utilizing data to make more informed decisions.

The same shift is happening with maintenance. Historically, the speed at which repair issues were addressed depended largely on local property managers. Corporate management had limited oversight into how maintenance teams were performing. With today’s technology, all maintenance within a portfolio can be overseen centrally, improving the consistency of service and helping boost resident satisfaction. For these reasons, many SFR owners are prioritizing investments in tech that centralizes maintenance across their distributed national portfolios.

Some of these tools leverage artificial intelligence (AI) to streamline and automate the entire work-order lifecycle from creation to completion — managing everything from vendor scheduling and dispatch to resident communications from one single platform. The benefits of this can even go beyond simple time and cost savings — SFR owners with the right technology deployed across their portfolios can also utilize it to optimize occupancy and revenue growth strategies by expediting unit turnovers and renovations, preventing extended apartment downtime between leases.

Ultimately, while SFR has been quick to adopt technology as more institutional-level owners entered the space, convoluted processes like property maintenance have continued to cause challenges. Now, as owners continuously move toward centralized technology, SFR is finally getting tech-smart in terms of property services operations.

Looking ahead, as larger investors continue to funnel capital into the space and work to create the most streamlined operational practices, technology innovation in the SFR sector will continue to expand.

Joshua Swift
President, Residential
Lessen
4800 N Scottsdale Rd.
Scottsdale, AZ 85251
(480)576-7200