Dallas Tanner and Charles Young
CEO; President and COO at Invitation Homes
Rental, sweet rental.
It may not be home, but there’s plenty of demand for single-family rentals, as many Americans forgo starter homes due to higher mortgage rates. Invitation Homes is America’s biggest institutional landlord in the space.
The company, led by Dallas Tanner and Charles Young, owns 83,000 homes throughout the country with heavy concentrations in Florida, other Southeastern states and the West.
While the housing market has careened from pandemic low to pandemic rush, then headlong into the highest mortgage rates in two generations, the single-family rental space has continued to grow. In fact, the market is almost perfectly primed for a surge of single-family renters.
As millennials age out of cramped urban apartments, sometimes spurred by pandemic lockdowns, and housing prices remain ever more out of reach, many young families are turning to renting, according to Invitation Homes’ first-quarter earnings call. That, combined with the ongoing shortage of single-
family homes, is keeping rental growth robust.
Invitation Homes brought in $2.2 billion in rent in 2022, up 11 percent from the previous year, and collected another $586 million in the first quarter of 2023.
Of course, the last year has had its bumps. Many single-family institutional buyers paused buying in 2022 as financing got more expensive, and Invitation Homes has been judicious in building out its development pipeline instead of buying only, and has also been selling homes. In fact, the company sold more homes than it bought in the first quarter of 2023 while continuing to buy in its strongest markets, the company said.
Almost 50 percent of Invitation Homes’ rent revenue comes from just four cities: Los Angeles, Atlanta, Tampa and the Miami area, due to the high number of homes in those locations as well as the higher average rent.
The company doesn’t expect the housing market to implode, so there isn’t too much distress at the moment, Tanner said in the earnings call. But if that distress does descend, Invitation Homes will be ready.
“Scale is going to be more beneficial over the next couple of years, and it should benefit companies like ours in the REITs space where we have very low leverage and generally access and availability to different capital,” he said.
