The rise of corporate landlords came at the worst time for buyers in a challenging, competitive housing market. With stiff competition from buyers fighting for a small housing inventory, these multi-billion dollar corporations are out-bidding with cash and a quick close. And, they aren’t slowing down their pace of buying anytime soon.
How do you compete against a multi-billion-dollar corporate landlord? It’s simple; you don’t.
Corporate landlords have stringent guidelines for the homes they will buy. As a home buyer competing in your market, you only need to understand what homes corporate cash buyers aren’t purchasing.
By the end of this article, you’ll be able to adapt your home search to decrease your corporate competition and improve your odds of winning your dream home.
Who are corporate landlords?
Corporate landlords are large institutional home buyers who rent and manage their pool of homes. Many corporate landlords are large publicly traded companies or backed by Wall Street financial firms. These companies own tens of thousands of homes on average.
When considering how to compete with 鈥� or avoid competing with 鈥� these powerful cash buyers, the first step is to learn who the corporate landlords are in your market. Working with a seasoned REALTOR庐 is helpful as they will have a deep understanding of the top home buyers in your market.
Some of the biggest corporate landlords in the United States are:
- Progress Residential
- American Homes for Rent
- Invitation Homes
- FirstKey Homes
- Tricon Residential
- Home Partners of America
Not to be confused with iBuyers, who provide liquidity in the market by purchasing homes and immediately selling, corporate landlords buy houses for their long-term rental portfolio.
Having such large portfolios of tens of thousands of homes, corporate buyers can afford to make aggressive, over-list price offers by averaging out prices across their entire portfolio.
Corporate landlords have strict purchasing guidelines.
Corporate landlords follow strict guidelines regarding which types of homes and features they will purchase. If you can identify homes that fall outside their criteria, you can increase your odds of winning the home you desire.
As a top real estate brokerage in the Las Vegas market, we referenced multiple purchase contracts, direct marketing solicitations, and industry knowledge to identify a distinct list of guidelines.
Housing markets across the United States are unique and individual, so not all guidelines may apply. In Las Vegas, for example, homes with a septic tank and well water are not very common and won’t be purchased by corporate landlords.
In more rural areas, it’s likely more prevalent and not a strict corporate buyer guideline.
Search for homes with solar panel leases.
The 2021 report from the Solar Energy Industries Association (SEIA) and Wood Mackenzie showed that 1 out of every 600 homes in America installed solar panels each quarter.
Like California, Nevada, and Arizona, Sunny states have the highest percentage of solar homes.
Most homes with solar panels are on a lease program. The cost of the panels 鈥� often starting at $20,000 to $40,000 鈥� is added to the deed as a lien.
Corporate landlords will not purchase a home with a cloud on title. A cloud on title is considered an irregularity that could encumber or affect ownership of the property.
By focusing on homes with solar panels, you are more likely not to compete with a corporate cash buyer.
Always review the terms of the solar lease agreement before completing your purchase. The solar industry is young and fragmented. Some contracts won’t save you money versus paying for electricity until the end of a 15-year to a 20-year term.
草榴社区 a home with a pool or spa.
Home pools are a homeowners insurance and liability risk. According to the statistics, approximately 3,536 pool drownings happen annually.
With over 10.4 million homes with pools in the U.S., only 0.034% of pools each year have a tragic accident.
Based on these statistics, if you own 10,000 homes with a pool, you can expect three deaths at your properties yearly. With the added liability and insurance, it’s easier for corporate landlords to avoid purchasing homes with pools and spas.
While you’ll successfully avoid billion-dollar corporate cash buyers, pool homes are still popular and often see increased competition.
Companies like Home Partners of America, which provide a lease-to-buy option, will purchase pool properties.
Corporate cash buyers want to purchase the “everyday home.”
Corporate landlords need to appeal to the largest demographic for monthly rent and home size. For this reason, they generally purchase within or below the median sales price in each area.
Consider increasing your home price search by 10% or more above the median sales price if you have the budget to stretch.
Home purchasing budgets are usually the least flexible part of a home purchase, so you can consider stepping outside the standard on other features, like:
- 2 Bedroom homes
- Larger square-foot homes
- Homes with unfinished basements
- Attached homes
- Outdated homes that need extensive remodeling
Consider your area’s “average home” and step slightly outside that footprint to avoid stiff corporate cash buyer competition.
草榴社区 communities with rental restrictions.
If you’re a home rental company, you need to be able to rent the homes you own. Some homeowners associations have strict rental restrictions.
The HOA will limit the total number of investors allowed within the community to a set percentage, often 5% to 10% of the homes.
Rental restrictions are most common in townhouse communities.
These communities will not be easily identifiable, so it’s essential to work with a Realtor庐 that has deep knowledge of the area you’re shopping in.
Even the best Realtor庐 shouldn’t know every HOA’s rules, but they can ask the listing agent or contact the homeowners association directly.
Additional guidelines.
- Condominiums and attached homes, like townhouses and rowhouses.
- 55+ age-restricted communities.
- New constructions homes.
- Historic homes.
- Homes with septic and well (unless common in your area).
In Conclusion.
While you may not be able to entirely avoid competition from corporate landlords when shopping for your home, understanding their guidelines can give you an edge.
Don’t be discouraged if you find a home you love that will compete with corporate cash buyers. Many buyers are still winning their dream home by making a strong offer with a solid pre-approval from a reputable lender.
Most sellers want two things when selling their home, a high price and peace of mind the deal will close. Utilize your mortgage lender better by having them proactively reach out to the listing agent to confirm you are a well-qualified buyer.
If you need the equity from your current house to buy your next home, consider alternative programs like Buy Before You Sell 鈥� which also gives you the edge of competing with cash.
If you can ease a seller’s concern and offer a price they want, you can win against a corporate landlord, even when not buying with cash.
Happy house hunting.
