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57 a mistake, as these properties tend to have unreliable tenants, are often vacant and, can require costly repairs. PROPERTY DIFFERENCES Renters are typically looking for single- family rentals offering at least three bedrooms and 1.5 bathrooms, according to Pintar. However, some on the lower end of the market will consider two-bedroom, one- bathroom homes. Tamulevich said the appetite for two- bedroom homes for investors and renters alike has largely evaporated. As a result of the pandemic and people working from home and having to manage remote schooling, renters are increasingly looking for moderately priced, 2,000-square-foot homes offering four bedrooms and two or more bathrooms. One type of property that investors are largely steering clear of are condominiums. e initial investment, homeowner's association fees, and other costs make it difficult to maintain positive cash flow on this type of rental property. Some investors are looking for properties they will rent out for only a short time, selling the property when the value appreciates sufficiently. Others look to build large portfolios of rental properties for ongoing cashflow. To do that, an investor needs large sums of capital, Riehl said. "If they have a significant capital base to do the number of projects they want, then they can decide on a property-by-property basis to hold it, to lock in cash flows with the low, fixed-rate mortgage, and not only recapture the capital that they put into it, to use on the next deal, but also put $300 to $500 a month plus all the interest benefits and all the depreciation benefits of a rental." PROPERTY MANAGEMENT CONCERNS Good property managers are one of the major keys to success in the single-family home rental market, Tenenbaum said His top advice for those looking to get started or expand in the single-family rental market: "Make sure your property management team is the cornerstone of your investing career. People who are local can do both (invest in the properties and manage them), but I invest all over the country. e local property management team can be the key to your success or the key to your downfall." Property managers are the pulse of the investor's portfolio, Tenenbaum explained. "ey're a wealth of information. ey know the contractors, they know the values, they have better referrals to real estate agents than you can find yourself, unless they're local to the area." Good property managers will find responsible tenants. Poor ones will have more unrented properties, will have collection issues, etc., according to Tenenbaum. One way an investor can distinguish good property managers from poor ones is via their level of responsiveness, Tenenbaum said. "e sense of dedication and commitment to managing our assets goes hand-in-hand with communication. When I ask a question, I get a timely response. e response is complete. I know that they're dedicated and efficient what they're doing. "We've had the good, the bad, and the ugly with our properties' managers."" With a responsive property manager, the investor stays informed about why properties are unoccupied, Tenenbaum added. He gives much of the credit for the excellent performance of his single-family rental portfolio in Evansville, Indiana, to his property manager there. LOOKING AHEAD e single-family home rental market will remain strong for the foreseeable future, according to Tessar. "Next year, we'll have a better idea of what's going to be in this new tax bill. Everyone on the real estate side wants to understand what impact it's going to have on capital gains and 1031 exchanges." e next 12 months will also provide more clarity on how much of the work-from-home trend will remain, Tessar added. "e asset class is going to continue to evolve," Pintar predicted. "You're going to see a lot more communities being developed specifically for rent. ere's, there's a lot of core capital that's looking for safe, predictable returns. Outside of food and water, housing is people's greatest essential need. Being able to deliver and provide a nice-quality product for people is always going to be in demand." "What COVID-19 taught us all is that our work can be done remotely," Flaherty observed. "Taking that reality and constructing an office plan and overhead reduction plan needs to be paramount for 2021 and beyond. Controlling costs with flexible work environments is bringing home office monitoring software and outsource solutions to the forefront. Also, having now been burned by an unforeseen pandemic, a focus on disaster planning, technology, and redundancy contingency planning needs to be factored into the bandwidth and budget of every company in any vertical, but particularly the SFR space, which will definitely feel the crunch of another tide shift soon." Tennyson said that nonagency rental lending is a $40 billion market, providing a large opportunity for lenders like Lima One to provide loans "to improve the family neighborhoods so that others can live the American Dream." Pintar added: "We can't get these things built fast enough. Institutional investors that initially shied away from this product type are learning that the efficiencies of this asset class are better than any others. On a risk-adjusted basis, you'd be hard pressed to find a better opportunity than SFR." Phil Britt started covering mortgages and other financial services matters for a suburban Chicago newspaper in the mid-1980s before joining Savings Institutions magazine in 1992. When the publication moved its offices to Washington, D.C., in 1993, he started his own editorial services room and continued to cover mortgages, other financial services subjects, and technology for a variety of websites and publications.

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