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68 properties, rather than large institutional investors that own several hundred or several thousand. Beasley concurs, noting that small investors make up 98 percent of the SFR market. But this very fact, that small investors make up such a huge share of an economic ecosystem, nevertheless fuels the stigma that SFR is small potatoes. Kevin Ortner, CEO of Renters Warehouse, a Minnesota-based professional landlord and property management firm, says that sellers often hedge on the idea of renting because ownership has been the drum beat for decades. Sellers, he says, often don't consider renting their home and getting a mortgage on another and "having others pay down their mortgage," in part because people still see renting as lesser than owning. In turn, the rental market seems more chaotic and less lucrative. With this stigma tucked cozily into the subconscious of most Americans, SFR has until only about two or three years ago remained largely overlooked as a serious asset class. And if you're keeping a timeline, that's right around the time when the recession-created REO boom significantly evaporated. At its height, in 2010, nearly 3 million U.S. homes were in default, creating a massive REO glut that by last September had dipped to less than 110,000, the lowest number of REOs since 2005. REO is not gone by a country mile, Sanchez says, and should come back to its normal over the next 18 to 24 months. Understanding the REO boom-and-cool is important because in the boom, real estate investors looked for deals up front on properties that could be turned around when the market picked up. Greg Rand, CEO of OwnAmerica, a Charlotte-based acquisition, disposition, and advisory services firm for institutional SFR investors, says that a lot of REO investors in 2009 to 2011 bought properties with a five-to- seven-year hold strategy. "Well, guess what," he says. "Now its six years later." ese investors, he says, are now in the process of getting rid of those properties and deciding whether it is better to rent them or sell them outright. Increasingly, investors are seeing the value of holding onto one property and buying another. ey are, Rand says, starting to realize the value of longer-term investment. "You're not going to get the same 25 percent return," he says, referring to the large returns investors got for selling recession-era REOs. "Maybe you're looking at a 5 to 7 percent return, plus appreciation." But over time, smaller, consistent yields add up to much more stable sources of income. Keep in mind that because properties are not selling for the flea market prices they were six years ago, some interesting opportunities for property management firms have come about. According to Sanchez, whose firm operates in the real estate management and also in the property preservation realm, the focus of investors holding long-term SFR properties has more to do today with efficiencies than bargain buys. is, she says, has created a move toward consolidation of professional services among property preservation firms that are starting to offer ongoing property maintenance services to occupied residences. is, she says, coincides with a move toward more community-oriented investing. Prescient mainly handles property asset management services, such as taxes and HOA accounts for real estate investors. rough this prism, Sanchez has seen investment in association properties prove especially fruitful for SFR investors for the simple reason that when a property is part of an association neighborhood, there tends to be more of a push to keep that property in line with the neighborhood overall. is, she says, is compelling more investors to develop stronger ties with associations and neighborhoods, in an effort to be part of the community and not be perceived as absentee landlords. Still, a major benefit of SFR investment these days is its flexibility and potential for diversification, in terms of both geography and portfolio building. Geographically, Rand says, there is no definitive hot market for someone to start investing in SFR. But today's most active SFR markets are exactly the same ones as yesterday's REO markets: Phoenix, Dallas, Miami, and other metros where REO stock flooded the market. But investors today are able to do something "You're not going to get the same 25 percent return. Maybe you're looking at a 5 to 7 percent return, plus appreciation." But over time, smaller, consistent yields add up to much more stable sources of income. It's also rooted in the fact that SFR has been the most stable sector in real estate for 40 years or so.

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