Episode 32: Market Data with Nishant Phadnis

 

In today’s episode, hosts Jonathan Cook and Bryan Jenkins talk to Nishant Phadnis. Nishant leads the digital transformation of Rentals.com, a leading single family rental homes online marketplace. Rentals.com is part of the RentPath network of sites that also includes Rent.com and Apartmentguide.com. In April 2021, RentPath was acquired by Redfin.

 

 

Episode Highlights: 

 

  • Bryan says, “The success of management of a rental asset always starts with the success of having a good resident in the property paying the rent, taking care of the property, and once we have that catalyst in place and the rest, we just manage that piece of it.”
  • Sharing a brief about the marketplace, Nishant says, “Unless you are living under a rock right over the past year and a half, clearly things have changed, and the dynamics of how the pandemic impacted our marketplace is probably well aware with everyone.”
  • Nishant further adds, “On the demand side, we saw a ton of renters just kind of didn’t know what to do. They didn’t know, so everything was stopped, and then as that shutdown kind of started to reopen right after the three weeks, we saw a tremendous demand spike, particularly in the asset class that is the single-family rental marketplace.”
  • “A lot of renters, particularly the ones that are able to work from home, got introduced to a new problem, which is where in their house are they going to work consistently for 40 hours a week?”, says Nishant
  • While sharing some stats, Nishant says, “In a single-family rental, there is a lot more space than there is in multifamily. About 60% of single-family renters of rental properties have three or more bedrooms, and that is compared to 8% in multifamily, so you have 60% that have three bedrooms or more and you have 8% in the multifamily.”
  • Jonathan inquiries from Nishant “What is the average home in your area? Is it really all three bedrooms? Is this by default?”
  • Bryan says, “We are down in the low 20s across five different locations, so it is definitely an indicator of the market and everything going on with the restriction of the supply side.”
  • Talking national numbers again, Bryan asks Nishant, “We talked about occupancy, so do you have any numbers based around the market on a national average we see on rentals?”
  • Highlighting the demographic shift, Nishant says,” 59% of all new single-family rental home residents relocated from our urban residential area to a server room residential area.” 
  • Bryan points out, “The shift in strategy, everybody is focused on building rent. You push out to the boundaries so your returns are better, and you kind of balance out how far out can I go and still have the demand their right to ensure that I have success with my investment. But now we’re starting to see a different strategy. People are coming in smaller parcels that have been passed over for one reason or another.”
  • Highlighting about eviction moratorium, Nishant and Bryan discuss the nearly 7.8 million evictions in the pipeline. Bryan predicts a pretty high number out of the 7.8 million would be owners that are actually ready to get out of the rental. 
  • Nishant shares his concern about the affordability crisis. He says,” You have increased rent prices, you have more capital to spend, a lot of investors looking for limited supply, and a lot of these homes are all the new constructions are A-class properties.”
  • He further adds, “We have class B&C properties that don’t exist. No new supply coming on that market.” “You have an individual renter who can afford, you know, the significant price increases, so you might have more roommate style affordability structures.”
  • Jonathan inquires, “Let’s talk about how do we increase rents and yet still not make something so unaffordable that we can’t put a tenant in place and we can’t find a resident if it isn’t just about adding value?”
  • Nishant says, “If as an owner you don’t allow pets, you are just wrong. This way, you are cutting out a tremendous piece of your rental pool, and particularly your qualified rental pool. It is those who established, they have their families and pets.”
  • Nishant says, “21/2 % of all owners are institutional landlords; this means only 54% of all single-family rental owners only owned one property.” 
  • Nishant says, “Working remote 100% of the time, eliminates to your geographic constraints, and we are seeing a tremendous amount of people moving away from the coastal cities to the rural parts of the United States; this is inflating home prices in those areas. It is driving more attractive investment in the areas; more investors will come, more supply will come, and more economic revitalization in those areas will come.”
  • Nishant reiterates, “Prices will eventually come down on the lumber construction, and supply will eventually catch up to demand.”
  • Nishant says, “Demand in the market is super high, I think it is a good time to make a smart decision with your investment. It is a good time to be an investor, and ultimately, it is a good time to be a renter or resident.”

 

 

3 Key Points:

 

  1. Nishant shares his valuable insights on the rental increase. He says, “When you have high demand high occupancy, lot of owners take advantage of that. Single-family rentals have increased by 5.3% year over year, so rent prices have grown 5.3% year over year on average this year versus April last year.”
  2. Jonathan, Bryan, and Nishant discuss high demand, high rent prices investors are attractive, but still companies face challenges on the supply side. 
  3. Bryan asks, “In terms of eviction moratorium, there is going to be some adjustments. Do you have any predictions, whether it’s based on the information you have seen? You know what the next 12 months are going to be like?” 

 

 

Tweetable Quotes:

 

  • “In terms of occupancy, the national average is growing.”- Nishant Phadnis
  • “10-15 twenty years ago, in this space, the only way to buy a property was to find that owner who was willing to sell to you that allowed you to kind of turn it into a rental property.”- Nishant Phadnis
  • “There are a lot of things that the new normal has introduced to us.” - Nishant Phadnis
  • “You have to adapt to the audience you serve.” – Jonathan
  • “The pandemic and work from home situation has pushed people in the direction of being space conscious.” - Bryan

 

 

 

Resources Mentioned:

 

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