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52 SFRs for rentals because purchase prices had appreciated to the point that they could make more on renting a property than from flipping it in most cases. ough interest rates for SFRs trended up as much as 200+ basis points since January, they have remained steady more recently and could trend down slightly by the end of the year. However, interest rates are unlikely to drop below the rate they were at when the year started, experts agree. By the end of April, those with the access to capital were able to acquire distressed assets at 75 cents on the dollar, said Sanjay Raghavaraju, Founder and CEO of 33 Holdings. Even with the uncertainty and high unemployment caused by the pandemic, rent collections are running only slightly behind where they were at the same time last year and occupancy has remained steady, said Mike Tamulevich, President, National Brokerage for Marketplace Homes. Alex Offutt, Managing Director, Constructive Loans, pointed out that landlords can evict non-paying tenants easier than a mortgage holder can foreclose on a loan, so renters have kept up with payments better than mortgagees since the onset of the pandemic. Alex Hemani, CEO of Alex Hemani Companies, added that, even if a renter needs to be evicted, SFRs are so popular that there are 10 other potential tenants ready to move in and pay promptly. "e inventory that is available is flying off the shelf." SFR buyer inquiries started picking up in July, said Jeff Cline, Executive Director of SVN Advisors. Investors had held on to their capital once the pandemic hit and are now looking to invest it again. But many commercial investments, including multifamily housing and office buildings, are expected to have poor returns as people look for places to live and work with lower population density. In addition to higher interest rates, lenders have increased reserve requirements and have more enhanced requirements for rent collection histories, occupancy rates, etc., than they did in the first half of the year, Offutt said. He added that some lenders are more likely to favor experienced SFR investors and provide them with slightly better loan terms. "ere are three primary things that we look for in an investor when making loans: an investor's experience, assets, and credit," said Josh Craig, Chief Revenue Officer for Lima One Capital. e company evaluates the properties as well, looking at the value of each as a stand-alone property and how attractive it is to other landlords. Loan leverage is another consideration. e demand for and income available from SFRs is expected to continue for several years due to continuing strong demand and a lack of supply. According to the Urban Institute: "After completing a major demographic study projecting headship and homeownership rates through 2030, we concluded that demand for rental housing over the next 15 years will dramatically increase—and we as a nation are not prepared." Urban Institute's analysis projects that from 2010–2030, the growth in rental households will exceed that of homeowners by 4 million, with an increase of 13 million rental households and 9 million homeowner households. at's five renters for every three homeowners. Compared with the previous 20 years, the increase in homeowners was almost twice that of renters, even with the housing crash: 8.8 million new rental households and 16.1 million new homeowner households. THE WHERES AND THE WHYS e most popular SFR regions are south of the Mason-Dixon line. Cline cited Charlotte, Tennessee; Orlando and Tampa in Florida; Phoenix; and Las Vegas. Others added that areas around Dallas and Houston are also attractive. e movement south has been dictated largely by higher taxes in northern states, though there are still some attractive SFRs there as well. Tesch added that, in addition to those southern cities, there are some northern cities like Columbus and Cleveland in Ohio, as well as Detroit, that have good job markets (some robotics-related industries have sprung up near Detroit), with workers needing affordable homes and preferring SFRs to multifamily rentals. Properties further out from city centers tend to be more popular because they offer more space than in tightly packed urban areas, "The inventory that is available is flying off the shelf." — Alex Hemani, CEO, Alex Hermani Companies Cover Story By: Phil Britt