Becoming a landlord is just a click away
Wally Charnoff began tracking foreclosures at the height of the housing crash — watching distressed home sales, prices and rents. His data were so deep that his company quickly attracted institutional investors.
“When Wall Street came into the space, a lot of tools and sophistication chased them in,” said Charnoff. “Once Wall Street said, ‘Hey this is an asset class that we’re going to pay attention to,’ then companies started developing data analytics, technologies, acquisition tools.”
His small company, RentRange, grew exponentially. Just over a year ago it was acquired, along with real estate search firm Investability, by Altisource, a financial services firm for the real estate and mortgage markets. Charnoff now heads Investability, an online residential real estate search and acquisition platform that relies heavily on housing market data analytics.
“All of the products and services we’ve developed, we try to keep the pricing model and the offerings themselves geared towards helping the investor put their money to work as efficiently as possible,” said Charnoff, who adds that the fees are in line with the traditional real estate fees you would pay when you buy a home to live in.
Investability and HomeUnion operate nationally; many others focus on local markets. These firms make it easy to invest, but they don’t negate the risk involved in any real estate transaction. As the nation learned barely a decade ago, home prices go up, but they also go down. Ironically, the epic housing crash was the impetus for the rise of these companies. Becoming a landlord is now easier, but the pitfalls remain.
“It’s normally a very rosy picture, but sometimes tenants don’t pay their bills, tenants move out and you have to turn the property, dishwashers break, roofs leak, so one thing I’d say is when you purchase real estate as an investor, it’s really important to have a good project manager,” said Charnoff, whose company helps investors secure property management as well.
“It’s really important to understand some of the expenses that go into owning single family rentals as an investment and really be prepared for times when the income isn’t there and when the house might need maintenance or repair.”
Rental demand is currently high, as the nation’s home ownership rate recently hit a 50-year low. The housing market is improving, and home sales are rising, but so are mortgage rates and home prices. Rentals have historically made up at least 10 percent of the single-family housing stock, but about a million more rental homes were added over the course of the foreclosure crisis.
“I see servicing the single family rental space as a growing industry. I think we’re going to see more and more market entrants enter the space,” said Charnoff.