American Homes 4 Rent & Other Useful Comparisons

American Homes 4 Rent & Other Useful Comparisons

Rental Property Investor · Tulsa, OK · Member since 2012 · 291 posts · 102 votes

As a landlord with several dozen properties, does anyone utilize publicly traded SFR property rental businesses such as American Homes 4 Rent, Starwood Waywood Residential Trust, Blackstone's Invitation Homes, etc to help gauge comparisons between what us small fish do versus these large landlords?

I personally have found myself sifting through a recent debt financing structure American Homes 4 Rent completed on ~$500M of property guaranteed loans. The structure resembled most of my SFR mortgages, however their terms are not as lucrative as mine are (such as 10yr notes vs my 30yr fixed notes).

Furthermore, I also have spent some time sifting through these publicly traded entities reports and some of these guys are operating significantly less efficient than I am (such as 20%-30% vacancy rates).  I have found these metrics to be tremendously useful in gauging localized market trends since they often report on a per market basis while also providing me insight as to whether or not I am operating efficiently.

Finally, as these public companies are relatively new to the the world I am paying close attention to what they are doing and how they operate... Not to replicate them, but to help identify areas where I can exploit and provide a better solution (such as quicker turnarounds between renters than some of these guys' typical 90+ day average).  Given their size, I see additional costs such as greater regulation, higher management and admin costs, and more rigidity.

I'd love to hear if anyone else is using these public companies as gauges/metrics for their own portfolio's and I certainly recognize that its probably not applicable to many here given that most people seem to invest in flips or lower income properties.

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  • Investor · Willow Spring, NC · Member since 2009 · 5k+ posts · 3k+ votes
    11y

    See also http://www.biggerpockets.com/forums/311/topics/86191-the-modus-operandi-of-the-mass-buyer---a-case-study

    Their business model doesn't match up/compare well with the average small time landlord.

    The large (I should say massive) Depreciation expense makes profitablility difficult even when unleveraged. Hence you need to look at the non-GAAP numbers. That's not the case with the average small time landlord.  On a positive note for AH4R, they did a good job with leveraging in their first securitization. LIBOR plus 1.54%?  That's like about 2% interest, right? Their second (September 2014 Securitization (the 10 year)) is a more reasonable 4.42%.

  • Rental Property Investor · MA · Member since 2014 · 420 posts · 213 votes
    11y

    I have access to NASDAQ PM so I do see some interesting things come through from time to time. Not one of these SFR companies even makes the list as a "company to watch".

    The main issue is scalability.  The average small personal investor might start with residential income properties and then move to small apartments and then perhaps to communities or something like that.  This allows for scaling growth and condensing ownership.  The model used by these newly formed companies has not been tested by time.  What happens when a major event occurs, factory shuts down, migration, local laws change, and so on.  

    I look to Realty Income and a few others as a gauge personally.  Long term leases tend to shed light better because changes can be see with a rippling effect.  

    Just my .02 cents.

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