Or, listen to the podcast: https://imn.org/podcasts/future-proofing-single-family-rentals-trends-tech-strategies-success

Q: What can you tell us about Ark homes for rent and your role as CEO.

A: Sure, thanks again for having me and looking forward to the big IMN meeting out in, out in Phoenix. It's always a great event. Ark is a single family rental and BTR platform. We have about 5,000 units total under management in the southeast. We're in 7 states, 30+ markets and really a fully integrated platform. So we have asset management, property management, finance acquisitions. And it's a great platform, great people. We've had really really good success the last couple of years, growing and developing the platform into an institutional level manager. And we're really excited about it. 

Q: What major trends are shaping the future of the single-family rental market.

A: When I think about the trends that are shaping the single family rental market, I think of sort of external factors and then organic factors. And the organic factor to me, that's really moving and changing. How we do business is technology. It's everything from AI, which is a big buzzword that everybody use seemingly for every technology development that comes along. It's also just general systems and infrastructure, you know, single family rental, a lot of the it's I mean, it's called scattered site inventory. Right? So it by definition, it's scattered and that makes management more difficult. And so a lot of technical developments and technology advances have made it easier for us to manage our product more efficiently. Either with the same number of people managing more units or fewer people managing more units, which is actually a huge advantage for us on the on the external side, from a macro standpoint it's all about the rate of home ownership.

I think, as you know, as interest rates go, and as home prices go we will be influenced as a market and as a sector, and I think the SFR  and the BTR business is, you know, it's going to be gonna parallel what happens in the single family market. And when the single family market slows down on the sales side, I think you can see rentals pick up and and vice versa. And I think that's something we have to really monitor and something we can't control as much.

Q: In the environment of interest rates that we've had in economic uncertainty. How are you actually adapting your SFR investment strategies to stay competitive?

Well, you know, I've been here for almost a year, and I think one of the biggest things that we've done from a financial strategy standpoint is really go from floating rate to fixed rate, that I think that a lot of the a lot of the floating rate facilities, you know, really caused a drag on performance. A lot of assets, I think rates having moderated a little bit, not as much as we'd like to see, but spreads coming in a little bit. It's made our refinances more attractive on a fixed rate basis and taken some of that interest rate risk out of the equation for us going forward, and and I'm and I'm happy about that.

Q: You’ve mentioned technology playing such a pivotal role in this space. Are there any particular case studies you can share, involving technology and prop tech, and how that's helping customer retention?

A: Sure, I think one of the biggest things we've done, and we're actually at the tail end of the implementation now is, we've actually implemented an AI solution for a lot of our leasing renewal and lead follow up.

And what it's allowed us to do is reach out to potential residents faster with better responses, more coordinated responses, and more consistent information. And you know, you might have a potential resident on the website at one o'clock in the morning and fires off an email to the site, saying, I'm interested in the property. Well, that that person's interested right then, and you know, maybe at 9 o'clock in the morning when the when the person comes to the office, you know they're not going to be as interested or not going to be as accessible, and so having a system that can respond to those inquiries, and having a system that can respond to those residents, you know, in A, on a just in time basis has really improved. Lead generation lead, follow up, and and it's led to a nice increase in applications per lead as well.

Q:  You've worked trying to help millennials and Gen Z get integrated into the SFR and BTR space. Looking at challenges with home affordability and opportunities within the space and helping those demographics specifically, do you have any thoughts you can share there on what could be done?

A: Well, you know, I think home affordability really affects affects everybody right? And so for the for the younger cohort, it's as much a matter of experience as anything else, and so, they they see their friends or their older colleagues. And you know this is a relatively nascent business. And so if their older friends and colleagues, you know, all lived in apartments, and and they think, well, that's just what you do. You just go. You go live in an apartment until you buy a home, and I think what we're seeing as an industry - what BTR and SFR is doing - is it's filling that void where a resident wants to have something more than their two bedroom apartment in a big community. But they're either not ready, willing, or able to buy a home yet and so introducing them to this idea that you can still rent a home that is large enough to fill the needs that you have. Now, whether you just want more space, or whether you're thinking about starting a family, or you just started a family, and you're growing and busting at the same. Whatever it is, you get more space, and you know you're getting a garage, you're getting a yard, you're getting nobody above you or below you, maybe just somebody to the side of you. It's a little more privacy. It's a little bit lower density and it's a more mature feeling type of property and type of home. And I think that's what people wanted, even though they didn't necessarily realize that's what they wanted. And so, to your point. It really is that exposure, that marketing that you know, potential resident education. I think that's made us a little more successful and allowed us to land some of those residents, and some of those generate some of those leads, that we might not have otherwise.

Q: Hmm! What do you think this space will look like 3 to 5 years from now?

A: You know, it's hard to say, because I do think those macro trends are going to have a big impact. What I will say is as this sector matures in the industry, I think it's going to be much more accepted as an option for folks who maybe felt stuck when they were in an apartment and and couldn't buy a home. And it's also going to institutionalize and make more efficient the sort of mom and pop process where, you know, you might have had somebody who had a had a home. They moved into a larger home. They kept the old home, and they just rented it out, and they just do it themselves, and if something breaks they fix it when they can. And you know that that was never a very efficient industry, and that was never a very professional industry, and I think what BTR and SFR are doing generally is institutionalizing and professionalizing that segment of the market which is going to make it more appealing to potential residents and and also make it more accepted in the financial community which is going to mean that equity and debt are going to be more available. So I think we grow. I think, in terms of the residential sector. I think it has the most opportunity of any of the other subsectors, just because it is so new, and there is so much more that can be done and will be done. There's going to be a lot of ebbs and flows in the markets, but I'm excited about the medium and long term potential.

Q: Is there a particular standout opportunity for investors in the SFR space right now? And and you know, how could that be capitalized?

A: I think the SDE business was the early part of our business right it came out of the GFC There was the sort of the fix and flip trade that came out of all the the foreclosures, and that that has evolved over the last 10 or 15 years into what we have today, which is the SFR and then the BTR. To me, there's more opportunity in build to rent. I think it is easier to operate. I think it offers potential residents more of what they're looking for in terms of. You have a community, you know, and at a certain size you have amenities. You have the dog park, you have the outdoor grills and kitchen. Maybe you have a pool, maybe a fitness center. Maybe you have a tennis court, whatever it is, but it's it's that step up in terms of the size and quality of the home that you're used to from an apartment, but you're not giving up all the amenities that you would be if you were moving into a detached single family home, and I think there's a lot of room for growth there, and I think for capital, both debt and equity. That's a great opportunity.

Q: Are there particular ways that you're addressing energy efficiency or other general sustainable developments for the future?

A: So, we are not a developer or a builder per se. Obviously, that's something we're focused on, energy efficient homes means lower utility bills for our residents, and that's something that we're we're always interested in, something that we can market on. I do pay a lot of attention to our builders and the products that they're building and the products that they're using. So yes, we do focus on that. It's hard in residential to get those, you know, GRESB scores and energy efficient scores just because of the nature of the type of construction that we have it just doesn't lend itself like an office building or a shopping center might. But no, we we care a lot about that, and and it's a lot about providing that value to our resident. You know, a more energy efficient home is a less expensive home to own and maintain, and for us and our residents. That's a good thing.

Q: Are there any emerging markets or regions that are showing real potential for SFR right now? And how do you evaluate which markets show promise?

A: You know. Well, great question. You know, the first thing you have to look at is population growth. You know whether it's, you know, wherever the in migration is coming from. You've got to have population growth in a market in order for expansion in the residential sector to be viable. So that's the first thing we screen for then after that, it's income levels. If you're attracting a wealthier, higher earning potential resident pool, then that's a great space for SFR and BTR and then after that it's once you look at the demand side, then you have to look at the supply side, and that turns into you know what what else is being built in the market, what else is being developed? What else is planned? And that includes both single family and multifamily. I think if you're going to offer a rental product, you have to look at all the rental options as competition. And for us, that means incorporating an analysis of the of the multifamily as well as the single family development, because that does impact us, whether to a greater or lesser degree, depending on the market. But it does impact us.

Q: In this ultra-competitive market, what do you think distinguishes Ark Homes for Rent?

A: I think for us it's a it's our experience. So the company has been in this business since the very beginning. Our founder started the company in 2008 in the depths of the GFC. So we have helped the business to evolve. We've watched the industry change, and I think we've been ahead or on the curve as it is, as it has changed and grown and evolved. I don't think it helps to have that kind of institutional experience and institutional knowledge. You know, we're not a home builder that got into the SFR BTR business, and we're not a multifamily developer that got into the BTR of our business. We are a company that grew up as this business, and as this industry grew up, and I just think that knowledge and that perspective gives us a unique point of view. We're not coming at it from the viewpoint of a of a builder or a multifamily developer. We're coming in at it with a viewpoint off we've always been an SFR and BTR company. I think that's I think that's really helpful and gives us a big advantage.

Q: Final question, what are you looking forward to about IMN's Single Family Rental Forum (West). What value do you get from being there?

A: It's a combination of two things. The first one is because we talked about how much technology has changed the business, I'm always excited to see what new and innovative products are out there on the technology side. And I think the, you know, kind of the vendor bullpen that they put up, and you can kind of walk down and see what people are doing -  I always get a lot out of that and I think that's really helpful. And then it's the it's the content and you know you go to the sessions and you hear somebody talking about, you know whether it's operations, and you know some of the tips and tricks that they've learned. I mean, we think we're good, but by no means are we perfect. And so we can always be better. And it's always nice to hear things that people are doing differently, that maybe we can adapt. Also, hearing about the markets you know, we obviously we do our own research. And you know, we're plugged into John Burns. And the same research, everybody else is. But if you're in a market, your perspective is different, maybe, than somebody who wants to be in a market. If there's places that we're looking at going, and we can get some information or some perspective from someone who's already there, that's incredibly helpful. It's a great conference: love the market content, love the operational, the panels and sessions, and really like the the vendor booths.

Don't miss out - register for the SFR West Forum: www.sfrwest.com/registration

Listen to the podcast: https://imn.org/podcasts/future-proofing-single-family-rentals-trends-tech-strategies-success