Did you miss out on the NRHC conference? In this episode, Thad and Andrew recap just as the National Rental Home Council (NRHC) conference wraps up. They share insights about what’s going on in the market, critical trends and KPIs, and discuss how to change the narrative about rising home prices. Learn why Thad feels inspired and excited by the SFR industry as they take questions from the audience.
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Hosted by Andrew Smallwood and Laura Mac
Featuring Thad Tarkington
Produced by Andrew Smallwood, Laura Mac, and Carol Housel
Edited by Carol Housel and Isaac Balachandran
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Thad Tarkington
So last year, 6.5 million total sales of homes. 1 million were new construction and the remainder were resales. And if you look at the institutional total, what was deemed institutional buying was 100,000 homes net purchased. And so when you look at that, it's really one and a half percent of all home sales. And so I think, you know, the conversation is, you know, while you might have, you know, certain neighborhoods or certain markets where, you know, that number may skew higher overall, it's really only about a percent and a half. And so does that narrative of like, you know, Wall Street buying up Main Street, you know, does that really apply was a question.
Andrew Smallwood
We're going to get started. Thad and I are here in Washington, D.C., and before we get started, the agenda for today. We want this to be an open-format dialog conversation. And we'd love to hear from many voices We do have our notes which both of us were taking in review. I mean, this just ended hours ago. So we've gotten some of our notes are like on pieces of paper over here and we were just reviewing and getting a little organized before we get started here. But we want this to be interactive. There's dialog, there are things you guys can share to really go deeper on some of this stuff or add perspectives to what we're going to offer and report back here. So here's what we're going to do to get kicked off. I just want to explain the conference we were at and who was at this conference is just a point of context. And then we'll dove right into a little bit of some interesting things that we heard. So again, in Washington, D.C., we were in our purple suits you know, not just our purple t-shirts, and we were with the National Rental Home Council. Second Nature has been an advisory member and a preferred partner of the interagency for a few years. And the NRDC is really an advocacy group for single-family rental and small multifamily rental housing providers. You know, a lot of the members are frankly, you know, people like invitation homes, American homes 4 rent a lot of the large housing operators. There are also a number of service providers that are part of this as well. But there are it's open to smaller owner-operators and there are some third party property managers in addition to that, who are members of the group, although Naropa would be the primary organization for most people like that. Many of you joining in, you're more familiar with Naropa and so there are about 400 people, I want to say. Yeah, is that right? OK, so about 400 people attended the first in-person event like this for nature definitely went great. I would just say, generally speaking, it felt like a great conference, with a lot of great content and some good networking as well. And although I will say the parties were not as good as other events that we've been to, maybe secondly, you'll have to bring that next. I was in bed by 10:30 pm a couple of nights, so I'm like, maybe we can step up the after-hours fund a little bit more. But certainly, during business hours it was very valuable so I think we should kick off with a little bit of what we heard from the CEOs of Invitation Homes, Dallas Dinner, Deep Single and American Hustle, and we had Kevin Baldridge, CEO at Tricon American Homes. We had Colin Keating, who's the CEO. At first, he hums and ultimately she's the executive director. President of the NRHC.
Thad Tarkington
Yeah, I think I believe she's the chairman right now.
Andrew Smallwood
So OK, so the chairperson of the NRHC Colin Keating. And first, he hums and we also had Dana Sprong. He's a Harvard grad in the class. We're getting to know Dale a little bit. He's one of the managing partners at Vine Brook Holmes, which operates out of the Midwest. And so they're asking some of these CEOs who all manage 10,000, 80,000 plus homes, you know, views about what's going on in the market, what's important to pay attention to, what are just some of the narratives around the industry, any critical trends or insights? And I'm going to pull up my notes, but maybe you can start us off. That was what stuck out to you from that session. Yeah. So if I were to.
Thad Tarkington
Cover kind of a high level of narrative, I would say, you know, a lot of conversation around headlines. And with housing prices rising aggressively, what is some of the focus and kind of the magnifying glass that's been put on the single-family rental industry. And specifically, given a lot of these are institutional investors, you know, what's the focus on the institutional? You know, are they net positive or are they net negative? And so, you know, some of the headlines obviously are promoting the benefits of professionalization. You know, the good quality product that they're bringing to the market, you know, the things they can do through scale that may not be available to an individual landlord, but, you know, on the other hand, people may be highlighting, hey, they're buying up a lot of new homes that are buying homes in neighborhoods and driving housing prices up. And so a lot of the conversation was around kind of that narrative, that headline. And, you know, what are things from a PR communications standpoint that they can do to better promote the good things they're doing? And then also tactically, you know, what reflection kind of what do they have to look in the mirror and say things we can do better? So that was a lot of the conversation. I would say a big topic for them when they say what are some sols we can do is really looking at, you know, focus on resident experience was it was a big topic focus on ESG and like what are the environmental or social things that that they can be doing? And then, you know, there's a lot of metrics that they walk through to really put things in perspective. So, you know, one interesting thing I'll share there is I said last year, 6.5 million total sales of homes 1 million were new construction and then the remainder were resales. And if you look at the institutional total, what was deemed institutional buying was 100,000 homes net purchased. And so when you look at that, it's really one and a half percent of all home sales. And so I think, you know, the conversation is, you know, while you might have, you know, certain neighborhoods or certain markets where, you know, that number may skew higher overall, it's really only about a percent and a half. And so does that narrative of like, you know, Wall Street buying up Main Street, you know, does that really apply was a question. And so I think that was, you know, some of the conversations even in terms of red resin experience, you know, if you look at kind of the institutional, they spent the last ten years, you know, really just kind of accumulating and getting operations, getting best practices in place. And so they're now saying, hey, how can we kind of turn the focus to really focus and focusing on that rental experience? Well, what can we do to make an amazing experience where you know, the word of mouth, the product is so good that it speaks for itself? So anyway, those are kind of the I'd summarize that, but anything you want to highlight?
Andrew Smallwood
I want to give you some interesting stats that I wrote down that maybe go a little bit deeper into what you said there. So Undersupply is the issue and has been a top issue. And I just want to put some context into that of if you look at, you know, population growth is actually kind of softening, you know, across the United States. And there are maybe some challenges and concerns with that. But really what drives rental demand is household formation, which is population growth, right? Like what? Who's aging into or getting to those life events that are going to move them into, you know, either wanting to buy a home or move into a single-family rental out of whatever type of housing class they are. So it's 1.7 and 1.9 million household formations per year. We got this from people like John Burns and some of the CEOs. You know, on the panel, there are only 1 million homes being completions per year. So you've got 1.7 million in household formation and 1 million completions. Right. And this has been happening over the last few years that they're calling about a four or four and a half million home deficit. And it's not going to get better over the next year or two dramatically. It's basically the outlook of that. And so demand for rental looks like it's going to be strong. Some of the larger operators, we're looking at their some of their demand is three and one half qualified applications per property. Right. So there is a lot of demand. It's higher than pre-pandemic demand. So not just, you know, the temporary things of the pandemic, you know, the pandemic factors happening there. That was the key thing and then another one was also just like the number of rental households in the opportunity for rentals in general, wanted to transition to that. 49 million households that rent in the United States, 125 million people and you know, a lot of what the media is talking about is certainly talking about like home buyers. Right. And first-time homebuyers. But there are 125 million American Americans. Right. That are families that are ultimately renting. And, you know, there's not as much coverage and talk and focus really on them. And so the nation is hopefully going to try to bring more attention to that. And that's a point they're taking away.
Thad Tarkington
And you really get one question from Claire. Well, which net number are you referring to, Claire?
Claire
The total number of increases that you said in and home formation, I think was the word you used is that in net numbers, there's got to be some that that also leads correctly?
Andrew Smallwood
Yeah. So just based on the net sorry. Yes. Net household formation, meaning, you know, people are living longer, I guess, and, you know, some of the other things on the other side of those trends that move people out of the housing market. Yeah. Basically, it's 1.7. You've got this large demographic supposedly of millennials, right. That's just aging into that stage of life where they're getting into the home buying. That's driving a lot of the demand, which is driving prices like crazy content. You know, everything that we're seeing on both sides of the housing market for sale and for rent, that's a lot of what's driving it is that just tremendous demand outpacing supply in a household formation versus building completion of housing units. So a million being completed per year, 1.7, 1.9 information which hopefully is a stat you can take to some of your investors and property owners are just talking about here's the outlook, you know, in the years ahead and what's going on let's see, what else do I have here? 90% of homes have multiple occupants. And so SFR originally we've seen that number be 82 and so that number has ticked up a little bit over time. So 90% of homes at these first key homes in their portfolio have multiple occupants and then also putting some of this rent growth in the context of, you know, thinking about things from a triple win lens, so to speak here of like rent growth is is one way to look at it. Right. And if you're the resident right, that's a cost increase. You know, that's not so as positive a thing, right from their standpoint and from where they sit and you know starting a position is easy got us thinking about even renewal offers and putting some of these things in context for residents over time. You know, I'm just thinking about communicating to a resident hey, with what has happened in the mortgage to rent, you know, kind of ratio. There's there is a 20% difference there you know if you look back a few months ago between that in and four if you look today with where mortgage rates are were price appreciation everything else has gone that's expanded to close to 40% and so you know when home prices are appreciating 19% year over a year suddenly that 12% rent growth increase or a renewal increase of 8% or something like that. You know in that kind of context it's driving more affordability right it's giving more access to family and I think we are everyone is expecting to see mortgage rates going where they are and it looks like the Fed is just going to continue to increase rates based on what everyone can tell. We're just expecting things to get harder and harder and harder to be accessible to buy a home and move into a home or stay in a home that maybe they could afford and locked if they didn't get that fixed rate you know, then it could be more challenging and drive more rental demand there.
Thad Tarkington
Andrew, one thing I'm going to follow up on and you know, we heard we heard a lot of conversation around this, you know, let's say you are you know, you do have some rate increases and you're in conversation with residents in that framing that Angie was just talking about. One interesting thing, if we see rates rise and say there are two points, I think the the the rough math is just you know, roughly 2% increase we've seen in mortgage rates has driven the cost of the mortgage up almost 33%, even though the home prices may not have gone up that much. But, you know, rent prices aren't going up 33%. So their relative cost to buy and that monthly payment you know if we see rates continue to go up another point two points you know you're going to see that rise even more. So we might have seen a scenario where know home that cost you know 300,000 might have been a $600 monthly payment now is a $24 monthly payment but a home that was that price to rent might have gone from 600 to 1700 or yeah. So something in that neighborhood right and so these are just things as you're thinking about promoting and maybe have the best word but as you're rolling out the digital increases and sharing stuff like that how can you really frame this and and and you know that is it wins the reason right hey we're not raising the cost at the same rate that the effective price for a new investor to get in the game would be. You know you do get some value for being in already another thing jumping into, kind of obviously, there's a ton of conversation around interest rates and the economic situation. One stat that was really interesting I and I didn't know this when they'd shared it is if you look at the last six recessions the country's gone through minus the financial crisis in 2008. So out of the last 65 out of the last six housing prices did not drop you know stayed relatively flat or hell was kind of the what was shared in. So what's interesting there to see it was a unique situation that led to that we don't have the same situation driving this and so the belief there was that you know based on the history that there's a high probability that housing prices do hold. One other factor that plays into that is in no recession in the past have you had $50 billion of outstanding commitments to build and buy single-family homes. And right now that's the rough industry estimate is there's about 50 billion right now that's sitting there trying to buy new homes. And so we're looking at kind of almost a support level where if you do see retail demand drop that the institutions will continue to buy. So should there be an economic downturn that continues we go into a full recession maybe you believe home prices will hold just from past precedent and that the buyer will actually potentially prop up and kind of help there as well? So again, I think, you know, as Andrew highlighted this, you know, if you're doing your quarterly investor calls, I think this is, you know, some great information you get from people who have dedicated a full team to researching and kind of putting this together.
Andrew Smallwood
So while you're looking at that, too, I'm just going to put a couple of things that from an advocacy standpoint Nike is looking at. So a big one is always and just the increasing boldness, I guess we'll call it, of homeowners to discriminatory practice towards renters. It is a little unbelievable, you know, to say we live in America in a group of people can point to another group of people and say, we don't want you to live here. I think that you know, that that is that's something that I think everybody in the room felt this really shouldn't be this way. And so they are going to be passionately advocating for just looking at how we solve this problem with archways. And I know many of you encountered the challenges ultimately of working archways. And there can be, you know, all of these kinds of issues where suddenly investors non on owner-occupied homes will be allowed. And there's a resident in a place. I mean, you essentially have a forced eviction taking place. I mean, it's just a bad situation, you know, that can be caused and ultimately impacting investors you know, ability to rent that asset, to allow affordability, allow these families access to school zones, more affordable housing flexibility, et cetera, that housing choice, right. Of being able to rent. You know, and in general, the professional operators want the same things as archways, like professionally maintained homes, like well-maintained and taken care of, et cetera. And there are way violations. And sometimes residents aren't always taking care of the lawn or things like that as they should. But there's been challenges with ultimately H-2A attorneys who are a bit opportunistic, I guess is what we could call and what you'd say is a couple of hundred dollar violation or something like that, more of a nuisance fee. Suddenly it's turning into a $10,000 type of lawsuit and legal expense, and it just becomes really prohibitive and a real disincentive for investors to be able to invest in these types of homes. And so that's something they're focusing on.
Thad Tarkington
Matt, I saw your comment. It's pretty varied. That seems very self-serving. One you know, another. The big thing they were talking about was ESG. And obviously, again, this is you know, they're very much at the macro level here. So, you know, they're really looking into trying to pull data around because the way we operate our homes, you know, driving interstate, you know, energy efficiency through various programs they're doing, how can we aggregate those numbers and say, here's an impact we're having that may be an accidental landlord, you know, their realities are not really doing anything right. They're just kind of handing the key over. So here's the stuff we're doing that's good for the environment. You know, on the social side, here's stuff we're doing. You know, they're talking about, you know, a lot of them are deploying and, you know, getting rental reporting, how we're creating new credit scores for people. They're talking about some of the buy-in assistance programs which help with financial literacy. But anyway, so a lot of stuff that they're starting to say, hey, here's the value we bring in. So I think, you know, we can expect to see more of that and then build to it. I know a few of you on this call, you know, have done some build tours and stuff into that. You know, that's a big piece. I think AMA put out what, 2200 homes this last year. And so, you know, definitely something it's a big trend. You know, they're typically doing 150 home communities they're single-family homes obviously, but you know, there's some small multifamily kind of strategy to how they manage on consistent appliances, things like that. So they're really talking about that. That's a big thing they're promoting is like, Hey, we're actually adding to the housing stock versus, you know, just acquiring.
Andrew Smallwood
So yeah, American housing 4 rent is now the 41st largest homebuilder in the nation, which is crazy to think about. They were not even a company but a decade ago. So there are a lot of them focusing more and more on developing land, and build around it.
Thad Tarkington
On that note, one thing we're hearing from them is, you know, homebuilders right now have a lot of demand from retail, but just like they're willing to buy homes off the market, you know, if the market softens, they're also ready and waiting for that, you know, if you see, you know, if homebuilding softens, they feel like they can be a really good partner. To the homebuilders. And, you know, to what extent prop up that industry should you see a slowdown? And the big win there that they promoting is, yeah, it takes a while to ramp up homebuilding supply. But then, you know, when it falls down, you know, you can't really turn it on and off like a faucet. So, you know, if you see a drop in retail, but the rental can step in and keep them going, you could see a steadier supply of homes and a better solution to kind of close that gap. I think, though, the last thing I had in my notes was there some conversation around, you know, housing supply that, you know, in the event of an actual recession, you know, if you had two to 3% of people said, you know, I'm going to have my parents move in with me or I'm going to move in if my parents or family need a roommate, you actually start you almost significantly close that gap. And so, you know, depending on consumer spending, behavior, you know, that could be one. Yeah. I don't know if you call it a headwind or a tailwind, I guess depends on your viewpoint. But that could be one thing that impacts, you know, supply and demand and could be a little bit of a curveball potentially. That's hard to forecast, you know, how consumers will behave. You know, culturally, we're typically very much one in space. So do you see that change just on the fringes but can really, really add up?
Andrew Smallwood
So I think the last thing I had down that's really telling you what you already know because you're experiencing it on a day-to-day basis. Is just costs are going up, you know, cost of capital, but also cost of labor and just how difficult it is to find, you know, maintenance and contract labor you know, construction, labor, rehab, labor, et cetera, that that gets quality jobs, jobs done in a timely manner. It's getting increasingly difficult as costs are going up and the cost of materials and supply chain is still a challenge. You know, I don't know how closely you're paying attention to the news, but, you know, recently still in China, there's been some shutdowns in like kind of other waves and things like that. And we won't really see the full impact of that until, you know, even a few months from now. But there are some things that have improved. You know, I heard this morning, you know, that refrigerators at one point were 33 weeks, that was the timeline to wait. And those are down to closer to three weeks. You know, a couple of years ago, it was like one day, you know, a couple of days. But anyway, so garage doors and garage doors, you know, windows. I mean, there's different parts of the supply chain that are, you know, going to be interesting to keep an eye on and just see you know, what potentially to look at, you know, what expectations ultimately to set for people. You know, that its lumber obviously has normalized a little bit down from its big peak but you know but it's still increased over where it was not too long ago. So the other thing I had down here is that we were listening to John Hope Bryant and another panel and there's just a point of insight or something that he said that was interesting which was that SFR it's the only emotional asset in real estate. And he talked about how when he was growing up in Compton, California, where he grew up. And for him home it was you know, it's like when you guys are out, move out, you see like these marks on the doorframe right? Where someone's like measuring the height of their kid, right? And then you can see like their kid's grown four or five, six inches over their stay in the home that you manage you know how for him in his neighborhood, that home was dignity, it was respected, it was protection and how much it just meant to him. And there's something really purposeful about that that I think we felt and the whole room felt a lot of inspiration and of the very noble work that you all do to provide this place for people. And of course, that challenge that's wrapped into that of it is so emotional that it just becomes so difficult right when things go wrong. And that's where it's hitting people. It's hitting people you know, where it's very personal to them. It's very emotional for them. And again, this is what you experience on a daily basis. But I just thought that was an interesting insight in the way that he shared. It was important. There are some interesting investor activities around like savings programs. There was one who got on stage that has thousands of homes mentioning a two to one kind of savings matched for their residents. And so the residents saved $50. They will actually match that for $50. And they are owner-operator, right? So they're kind of like on both sides that versus third party and talking about how to fund that, there's, you know, there are questions about this going to be duplicatable but it was interesting to see how hey, here's what we did for credit scores over the tenant's residency but here's also we did for their savings balances right over their time with us and saving for a down payment. That's not a three-month thing. You know, it's not like, OK, I'm just saving for what is some discretionary income for three months. You know, it's typically going to be over a longer time period. Helping a match helps people feel more momentum and progress, et cetera, towards that to help them get where they want to go. But it's still going to take, you know, a pretty meaningful period of time. And then finally, just that not just the savings, but also reducing their debt, you know, and getting inside some of the financial literacy in the programs. They're really getting involved in the holistic financial lives of their residents and delivering programs in offering support to get involved there. And it's pretty neat, actually, what a few of them are doing ultimately for the holistic financial position of the residents, which of course drives a little bit of a win of, hey, when you know, when you're helping residents get into that kind of financial position, of course, that's more endearing to you. Those people are more likely to take care of the home and take care of the relationship that they're in. But, you know, further, just their ability to pay rent. And when inevitably life happens and something comes up right, they're in a much better position to be able to weather and take that and be able to, you know, pay the rent in those kinds of places when that happens. And so, you know, maybe that's something that we'll see start to get you to know, duplicatable scalable and in ways, even vendors might come in to help support some of these things. To do that for other providers, I thought was pretty interesting. Anything else that before we get into the resident experience and a couple of your panels and some of that?
Thad Tarkington
No, I think, I mean, I think that's a pretty good summary. I would say yeah. I think I think you hit those two points there.
Andrew Smallwood
So yes. So talking about resident experience, it was those words, resident experience. It started from the very first opening CEO panel. It was mentioned discussed for maybe 8 minutes out of the 60 and then, you know, I mean multiple panels all throughout and then there were actually called nails so nice. She actually asked Thad to be featured on a panel with the chief commercial officer of Progress Residential and a couple of other providers in the space who you know are doing some pretty innovative things as relates to resident experience and have some thoughts on that I'll really I can share my notes listening. Yeah, and I did catch some things even Fassel teaching me things from the state do you think as often as we hang out I wouldn't hear too much new but there was some good stuff that he shared as well as the other panelists. But I think I'll have him talk more that you also moderated a tech panel in Resident Experience was a big part of that. So that moment you kicked off from your highlights and maybe the CliffsNotes version, what people can take away.
Thad Tarkington
Yeah. So I think from the technology standpoint, you know, it obviously this from the lens of kind of the institutional player, there's a lot of conversation around so much of this industry was built by financially oriented people. So a lot of talk about assets yields, you know, a lot of financial metrics and they've got down cold, but not so much around technology resident experience and, you know, some of the operational things that focus on that. So I think what you're seeing as a company like progress eight or something, my name is Premium. They've hired, you know, former CMO of Home Depot is now their CEO. They've hired executives from AT&T and McDonald's and so they're you're really starting to see this transition where it went from financial oriented, you know, maybe operationally oriented extent like how do we make the numbers work too. All right. We've solved that, you know, always work to do. But how do we actually design and kind of develop that experience that sets this product, you know, apart from an actual landlord? And so you see a lot of focus coming there. So the talking technology, I think, you know, a lot of legacy systems, some challenging integration. And so, you know, saying, hey, how can we get together in a collision and really say, you know, maybe create a data layer to better transact work between systems, processes, vendors. So a lot of interesting conversation around that and a big focus on, you know, using technology to better improve things. And then I'd say on the experience side, you know, part of it was, hey, what's the action we can take? So I think, you know, talking about like resident credit and the financial situation, I think there is a stat of 25% of homes right now. Have the credit reported to the bureaus so 75% of renters you know it's their biggest expense is not even factored into their financial score. So you know by doing that can you actually get people into the financial system, actually create a credit score for the first time and so they can start to get loans and participate. And I think you know actually this back to John O'Brien and saying, yeah, I can fix that he shared but us something in the trillions of dollars of lost GDP growth that we have and people who just do not participate, you know, if they could get in and start to loan start to buy that growth lifts all boats. But, you know, they're just kind of on the sidelines. And so yeah, I think a big focus, they're talking about a lot of customization, personalization, and just how can you customize the resident experience, you know, allow people to, you know, whether maybe furniture, Rensselaer, like, you know, lots of things like that. That is coming in line. And, you know, something we definitely talked about was, you know, services are time well saved but experiences are time well spent. So a lot of talk around, hey, we did this operational thing. It's creating a better experience. And in effect, it is, but it's not the operational convenience that creates a better experience. It's that time that they have to live in the home, and do other things that create those experiences. But on the flip side, you know, there's a lot of talk about, you know, if you have a bad experience, that's time not well spent. Right. And so, you know, things like AC failures or, you know, if you're cheap on the terms, right? You know, if a door locks out work, any guy, let's save the money. But then that's a phone call, right? And then how does that impact the team? So they really say, hey, how do we take the long view and really kind of invest in our properties, invest in our processes, try and really be proactive, get ahead of things. And then ultimately, yes, that's to the top of it. And the other half is how can we bring new services, new experiences, and new value to the industry? It was kind of a conversation. So a lot of people, you know, again, big conversation, and a lot of people are, I'd say, very bullish and excited about the industry. And, you know, I think there are a lot of opportunities. So definitely was a, you know, learned a lot there and, you know, thought it was encouraging to see kind of a focus shift in there.
Andrew Smallwood
So, yeah, you know, I think it's amazing how much in conversations the word assets is used. The asset, the asset, the asset. This, you know, in how little the word customer, you know, was used. And it was just a comment of like that said, hey, for a while for a lot of the industry, the focus is how do we make this financially viable? And there's still work being done, as you mentioned there. But it's a lot more of this focus going from transaction to relationships and people and emotionally connecting with customers. How do we drive a great long-term-minded experience for people that are going to build our reputation? Our resident experience is our reputation as an industry, right? It is how it was characterized. And it's so funny how like oftentimes it was talked about how like property management software when people say property management software, property management software, property management software, what are they talking about? Well, usually what they're talking about is Yardi or Realpage or App Folio or really it's the accounting, the ERP, you know, enterprise, resource planning, these accounting systems where again, that they're designed around how do we facilitate transactions between parties in real estate and organize that report that, et cetera. Right. And so a lot of work has been done there, and that has opened up all kinds of efficiencies and possibilities. I don't think we should understate you know, the contribution that those systems have had and what they've enabled. But is that the lens, that financial and transaction, is that the lens that really is going to measure the things, report the things enable the things that are going to drive a tremendous experience, and help professionals ultimately build the kind of winning experiences that are going to people will pay and stay for. You know, and I think there was a very candid discussion, actually, very publicly from folks of, hey, they've talked to Mr. Yardi, they've talked to Anon, et cetera. And, you know, there's a lot of focus on multifamily in the enterprise and a lot of these solutions. And, you know, unless something pretty dramatic changes, you know, it's not looking like that kind of massive shift. It's going to be hard to make, you know, for confidence that people are looking for solutions and ways to create these kinds of experiences outside of those platforms, which was interesting. You know, the other thing I thought was was fast is a lot of focus. And we know many of you on this call like your fans of Lead Simple. And so these other different this is a lot of people are focused on workflow automation, the ability for technology to really drive efficiency throughout the process, but not take people out of the process and allow people to be able to engage more probably also go on offense more than just defense from an experiential standpoint, a service standpoint, by driving a lot of those efficiencies through technology. And maybe you have something from the prototype panel of so from one of your panelists or send them to share their fad. That would be interesting to share with the group.
Thad Tarkington
Yeah, I think yeah, a big conversation. There was just I think that a lot of the lack of API integrations and the lack of consistency in data. So I think there's the conversation around how can we create a standard data format for single-family homes that everyone kind of subscribes to similar to gap accounting or you know like I think you guys are not going to get an easy answer. You do that for property data and a house that allows, you know, these dozens of software is that are addressing different portions of the market to come together. So I think a lot of them happen quickly. But I think you're you start to see some committees and stuff form that, you know, fast forward three to four years. You might get these standards. Everybody agrees to them and then we'll allow even further automation and efficiency. There you yeah. I think you're seeing some cool stuff. There's a company task easy that was on the panel and they've now when they're deploying their lawn service, they've now got satellite imagery that they can validate if the job was done right. And it's not as good as being in person and, you know, putting your own eyes on it. But for you know, the cost of grilling a truck to go inspect is obviously much higher. So so some pretty cool stuff in some pretty unexpected areas. Like, you know, phone service obviously is not the most exciting business. But now you got satellite imagery coming in and creating some, you know, some efficiency and kind of just, you know, scanning portfolios. Hey, if we spot any issues, can we recommend going do something? And so, you know, then I think yeah, there's some conversation. We had some of the smart tech folks in the panel, smart locks, smart home stuff, not smart yet. So you know, the question there was around, you know, how do you do the balance that we want to deploy smart home technology, but what happens if it ages or becomes obsolescence? And so some of the folks are looking at how do we create, again, an open standard for a smart home where we can use any of the products. But, you know, in the event that you have a thermostat that's ten years old, you know, how can you make sure it's still compliant and it works appropriately. So, you know, I think you see companies like Smart Rand who are addressing this saying, hey, we're going to have a dashboard. It integrates with everything. And that's your, you know, your one place to go. And you also have folks like Recently addressing that, saying, hey, we're going to build the hardware in the firmware. We can update it live. And so definitely some interesting stuff where I'd say, like, smart home for your own home, that investment might make sense to you. You can get whatever you want, but we have a portfolio of 500 homes. If you had 30 different systems, it's too hard to manage. So you see people on the enterprise level, I think purpose building for single-family, and it's really you know, some cool stuff coming, coming online. And I'm sure a lot of you work with one of those companies, so I know a lot of you. So anyway, that's, that's yeah, I think that was it from the tech panel kind of points.
Andrew Smallwood
But yeah, I think we've seen smart too. I mean, just even can the CEO a task is you was pretty candid about like $100 million has been put into trying to solve that problem among some others that are similar to just how hard it is yeah. The last ten years to get technology right but also service right when the two are still you know happening together at the same. And I think a lot of us have seen you know, a lot of people try to come into the property that ad space and say we're just going to technology everything away. Right. In this business. And how successful that would be. And I think we've seen a lot of people really struggle with that. But some people who have gone really focus. I think what you've seen is they've been through a lot of challenges the last year, but in the ten years ahead it looks pretty optimistic for technology to start to turn the corner on some pieces of this and ultimately parts of this to start to drive efficiency, which is critical because again, cost of labor costs and supplies, all these things are going up, right? So having a deflationary force of technology coming in is, you know, hopefully going to drive a lot of value. And again, help differentiate professional property managers who don't necessarily need to fear these tools. You're embracing these things, keeping an eye on them. Some of them are still early and probably not, you know, maybe not mature yet to take the whole portfolio back. But as they do mature you know, being quick to adopt those things and actually having an individual investor is not going to, you know, really learn how to be a master of all these tools and pulling them together to build a great experience. Right. And so rather than fearing these things, I think the even the people with all the resources in the world, I mean, we're talking about these are ten-figure companies, right, that owned and operated real estate. They could resource technology, they could do all these things. But they're very apt to work with, you know, folks outsource who can do pieces of certain things. And really with their land how do we bring this together to a coherent resident experience, a holistic resident experience, you know, that we drive and there are things we'll do, there are things will outsource. But pulling that all together, we can stack all these incremental wins and help really differentiate on resident experience because that is who is paying rent. That is the asset, right? It's the person. And focusing on people has been a key step that we got some questions in the chapter should be.
Thad Tarkington
Yeah. And I guess for Jim says, I think the last comment I'd have maybe is, you know, I myself I kind of left feeling inspired and excited about the space. I think there's a commitment from, you know, both dollars and you know, from people that we're going to really make the single-family asset class attractive. You know, there's going to be a, you know, a broad, you know, from a standpoint of positioning a lot of effort to go in and, you know, setting that question, you know, how do you make the rental experience so good that drives more dash and professional? It is something that we partially believe is that professional experience is is is worth paying for and it's actually to hire ours why. And so I just you know, overall, I think, you know, the tailwinds are all kind of building and we continue to move that direction. So definitely I've inspired and excited to continue to work with amazing people and on products and services that help. So in terms of questions yeah.
Andrew Smallwood
Let's do this. I want to start from the top. I think Jim Smith, I'm going all the way back to yours and we'll come down from there is a quick practical one. Is there a ceiling on the naps? This is back we're talking about if a resident saves $50 you know the investor puts in 50. I do believe there was a ceiling on that and so not just really unlimited if you put in a thousand we'll match a thousand but I believe it was something similar to that $50 match matched $50.
Thad Tarkington
That was or it was a specific program and I think you could use it for anything but you just you know as long as you're staying in the home.
Andrew Smallwood
That's right and I do believe they had to it wasn't something like hey you can do this for three months. And then move out. You know, there was a this is the program actually one thing I remember, I hope I'm representing this right. But I do think this is right that it wasn't just like any month of you say $50 from $50. It was as if you save $50.12 months in a row. Right. Then hey that you know, what would that be. $600.
Thad Tarkington
Yeah.
Andrew Smallwood
So you save $600 will match that $600. And really what they want to do is incentivize the habit of saving. Right. Not just events of saving sporadically. Right. How do we the habit of saving? Right. Being able to pay rent but also save a little bit on top of that was really what they were incentivizing Jim. And so that's a good follow-up question for those specifics.
Thad Tarkington
On the next one, I think, Claire, your comment around, you know, home price increases, investor cap rates. So there's actually a conversation here with a couple of the folks on the institutional side, plus the CEO of Roof Stock. And they were talking about how, you know, they've seen a big shift in the mentality from underwriting purely on yield and cash flow to say, you know, an appreciation was just a nice to have. And you're seeing people rethink the formula and talking about, OK, can I just break even and cover my costs? And an appreciation is the benefit. So you know, there's definitely, you know, some pressures there. But I think you're seeing people still find attractive opportunities. And, you know, it's really a different underwriting to an extent. You know, hey, this property can appreciate that might be one, you know, in acquiring where before I don't care if it appreciates it actually, you know, it's really about the yield. So I think you might see a shift into the markets they're focused on, you know, from that regard. And you also there's a lot of conversation about affordable housing. So, you know, if you look at you know and you all know this, of course, but you know a house that's 100 price point might rent for $1,000 per house that's $1,000,000 price point is not going to run for 10,000 of might run for 6000 and so do you start to really focus on a different asset class where you can't get those kinds of returns and you know what's the kind of work you can do to improve those and so I think you know wait again while maybe some of the easy pickings are going away. You know there's still definitely a strategy and I think you know as you think about as investor calls you to know, definitely some stuff where you can say, hey, you know, why don't we look at different asset types in terms of quality, you know, or price point and, you know, there's still some opportunity out there.
Andrew Smallwood
Cool. Any other questions or comments? Feel free to drop them in the chat. We are seeing a lot of people saying experience is where they are going to differentiate. I will add there were some third-party property managers who, you know, that we were talking to. They're just in general conversation, a few of them on panels as well. And as investors talk about cap rates and I don't think you would see this much in the retail investor or a person who owns one, two, three, or four homes. But, you know, for folks who own maybe dozens of homes, et cetera, as sophisticated investors, maybe some even have clients that have 50 homes or a hundred homes more, you know, the cap rate pressure and everything. Right rate is obviously challenging for them. And hopefully, they're taking a long-term mindset of is there may be a period of time here where there's some pressure there, there's going to be rent growth coming up, but they may feel some of that pressure in the short term. But long term, it's looking very good again for anybody who's not started the business, they're feeling good about it. So hopefully those investors are taking a long-term view versus a short-term view on that. And we are seeing some management companies for that class of investors get a little creative when they are adding ancillary programs, you know, whether it's resident benefit packages or other things that are creating ancillary profit streams some of them are sharing those directly, structuring their management where they're sharing a percentage of that actually with the investor, which is interesting. In other cases, they've actually negotiated different management fees, like maybe they've gotten a little more competitive on the management fee. I'll take some of the cap rate pressure off for some of those who are really feeling it, but they're taking all of the ancillary fees, you know, to their property management company. And they're thinking, again, just how do we build the model, the business model here so that it's a triple win experience for residents, investors, and the management team. And it's not just somebody taking a big sacrifice in order to, you know, alleviate pain for somebody else. And moving all the pain somewhere else. How can we solve some of these problems? Well, awesome. Listen, this was great. We can definitely give everyone a few minutes back of their triple Wednesday. If we have any questions, we'll take them. If not, you know, we'd love to hear your top takeaways, and what you're taking away from what we shared so far today. We'd love to see that in the chat. Sam, thanks for the question. Any expectation of additional evictions with inflation going on there? What do we hear about that? Hmm, while you actually take some time to remember, I'll just go off the cuff. What comes off? Off the cuff, Sam? You know, I think a lot of these larger companies you know, commented about how the CDC had their eviction moratorium at a certain point, and many of them actually put in their own non-eviction policy you know, predating that CDC eviction moratorium. And so I think a lot of them have really focused on and many of you have made these same comments to us in our conversations directly of like that eviction moratorium and not having that lever to pull force forced a lot of people to communicate with residents, create payment plans with residents and do other things and see there sometimes are other ways and sometimes it can be painful in the short term or a period of time. You know, it's spreading out a missing month of rent over months of rent, somebody goes jobless or in a financial event like that happens and they don't have the savings ready for that kind of thing. You know, potentially working with those residents over a period of time, that's not easy to do for every investor. And a lot of the investors have the savings, et cetera, to whether those kinds of things or see that payout. But we are seeing, you know, folks who are easily capitalized, have a lot of, you know, kind of flexible programs ultimately for these residents is something that was interesting that came out, was even just straight forgiveness. I think it was $150 million of rent forgiveness from the people just at this conference that was given out during the pandemic. And there are not a lot of headlines about that making it out into the media narratives. I'm not sure how sustainable that is or the safe haven. That's the right situation. But you know, I didn't hear much as far as just like what people are expecting of mass evictions or foreclosures or what else.
Thad Tarkington
Yeah, no, I mean, I would say there is some conversation around you know, around you know, if we go into a recession and you know, people lose income, it was really around. Do we see a demand and application drop right now? It's like every property getting sold immediately, with multiple applications. Do you see that softened some? But there really wasn't a conversation that I recall around eviction.
Andrew Smallwood
So, you know, I think, Sam, a lot of the people here, I mean, if you look at the profile of the invitation homes, their average household, it's $140,000 income, which I think is pretty different than your portfolio based on comments you've made in the past. You know progress residential I think is a little over $100,000 you know household income. And so there's a, you know, a lot of class, a single-family rental, a lot of class B single-family rental, you know, here in who's affected by that? Maybe, maybe a little bit different.
Thad Tarkington
Yeah. I'll just say one cool thing. If you have anyone that's doing more affordable or the lower-priced homes.
Andrew Smallwood
Oh, yeah.
Thad Tarkington
One thing we heard from a there's a group that that's what they focus on and they actually said, you know, obviously they don't have the same rent collection rates and certain things that some of the groups that have the three properties do. But they actually have a program where if you pay your rent on time, get your credit score out there. There's, there's a couple very simple, but a couple of bullet points like pay your rent on time, you know, grow your credit score that you can actually earn a discount on the rent. And so they really see, you know, they're looking at, you know, in those lower price points where you might more add more activity, less rent collection how do you actually drive that behavior up? You know, reward the people who do a good job, you know, and then there's the overall lift from everybody trying to do their best, actually offset some of the expense for those who achieve it. And so didn't really get great metrics. But I think, you know, an interesting thought experiment, if you're starting to recommend maybe those lower price points to investors as they're trying to grow during this period, you know, things you can do to offset some of the extra challenges that typically are the extra expense that comes with it.
Andrew Smallwood
So, yeah. I mean, you know, a lot of people we're talking about, hey, if we've got, you know, rent increases and rent increases into the double digits, you know, how long can that really go? You know, it's like maybe there's a couple more quarters of that, a few more quarters that a year or two of that but you know, eventually you're going to hit, you've got supply. You've got to the end of that third rail is affordability. Right. And so keeping an eye on what the income to rent ratio look like for your tenant profiles and ultimately who you're working with, you know, is something a lot of people are keeping an eye on. And a lot of the operators, you know, a three to one type of ratio is typically where they are. And so there's been room and there still will be a little more room but if you're closer to the two and a half, you know, or the lower end of three, some people are even seeing as high as a four to one ratio in their portfolios. You know, that's you know, the higher that ratio, maybe the more room there is. Yeah. The roommate. Yes, other people can start. That's right. Co-living. We'll see some ways that people solve that. So we have Atticus, who's the co-founder and CEO of Paths Split, which is taking a unique kind of living model to use. And they're creating some really interesting yield results for their investors by, you know, renting out a per room basis out of the homes yesterday and four-bedroom house and it gets split up across multiple residents and they've got a unique kind of platform for managing it. Some of the things like building residents, credit scores, et cetera, they're doing for this segment of affordable renters pretty interesting different business model and they've scaled it to a few thousand homes now in multiple markets. And so we're going to bring Atticus on and ask him some questions. We'd love to have you all on that. What's the date for that? I know it's in June, June 8th. Great. Which I think is actually the day that our $10,000 cash contest ends And listen, we'd love to hear your feedback. Feel free to, you know, message offline what you learned today. We'd love to hear that. Keep stacking your triple wins like everybody.