Single-family rental companies acquiring thousands of homes

By Nate Morabito, WCNC-TV and David Griffith, Charlotte Journalism Collaborative
Homebuyers aren’t just competing against other people for the limited number of houses for sale.


A Charlotte Journalism Collaborative analysis of sales data in five area counties identified thousands of homes, condos and townhouses acquired by single-family rental (SFR) investment companies over the course of a year.

Realtors say those SFR companies often come to the table with cash offers over asking price and intentions to turn the homes into rental properties.

“We put eight offers on houses and lost them all”

Katlyn Pflederer knows how it feels to lose to the SFR competition. Her family of five put eight offers down on houses in the Charlotte area and lost them all.

“After months and months of it, you kind of lose your hope,” the mother of three said. “It felt like I was letting my kids down.”

She said her family offered more than asking, agreed to match appraisals and even offered to waive repairs, but kept losing.

“We were doing everything we could that we were comfortable with to get a house and it didn’t work out,” Pflederer said. “When so many people are struggling, I think it is a sign that there’s a problem. One time my husband called our realtor and said, ‘We’re done.'”

Katlyn Pflederer, her husband Mitch and their three kids bought a Union County home in 2021 after a lengthy search. Credit: Katlyn Pflederer

Thankfully, that moment passed.

Realtor Robin Mann helped the Pflederers navigate the eight losses, including several, she said, that came at the hands of outside investors.

“They’re winning so much,” Mann said of investment companies. “My last two listings we had nine offers from the same exact investor teams before it hit market.”

Realtor Robin Mann helped the Pflederer’s overcome multiple losses, including several at the hands of single-family rental investors. Credit: Nate Morabito.

SFRs accounted for 5% of sales over 12 months

Single-family rental companies secured at least 4,100 area homes, condos and townhouses over a 12-month period in Mecklenburg, Gaston, Union, Cabarrus and Iredell counties, according to the data. Those SFRs accounted for 5% of all homes acquired during that timeframe.

SFR companies mainly focused on homes in the $300,000 price range, with the average purchase around $335,000 and the median price at $285,000. When the CJC isolated the middle range of all purchases (between $221,000 and $426,000) the percentage of properties acquired by SFR companies increased to just under 7%.

“A lot of homebuyers have been locked out of the market by these investors,” broker Jonathan Osman said. “It’s not healthy for our housing market.”

Broker Jonathan Osman said single-family rental companies, with cash offers over asking price, are locking some homebuyers out of the market. Credit: Ken Shermer

Osman said he sees it weekly, even before homes are officially listed.

“They’re backed with billions of dollars in hedge fund money,” he said. “I mean, they’ll buy anything.”

Osman argues investment companies not only deplete the available housing stock, they drive up prices, putting first-time homebuyers at an additional disadvantage.

“We transfer wealth in this country by real estate,” Osman said. “Almost a generation are missing out on that inter-generational wealth transfer that comes with real estate ownership.”

Not competition, but instead meeting a need

SFR companies dispute the storyline that casts them as the villain.

“There’s absolutely no data and no evidence to support the contention that single-family rental home companies do anything but provide a positive housing option for consumers,” National Rental Home Council Executive Director David Howard said. “In today’s market, with its challenges with affordability and accessibility, single-family rentals have become even more important.”

Howard said SFR companies are interested in growing cities like Charlotte, because there’s a demand for families who want to be near employment centers and quality schools.

“Frankly, it makes a lot of sense for companies to be involved with a market like Charlotte,” he said. “Demand for single-family rental housing is strong in a market like Charlotte. If the demand was not there, you would not see the kind of activity in the rental market that you’re seeing.”

Howard said there’s also a need for people who aren’t able or ready to buy yet.

Mireya Gaton signed a lease to rent a Gastonia home from single-family rental company Tricon Residential. She said the rental bought her time to find. Credit: Nate Morabito

Mireya Gaton is one of those people. She moved to the area from California, but feared rushing into home ownership. Instead, she signed a lease with Tricon Residential, one of the region’s largest SFR buyers, to rent a home in Gastonia.

“I wanted to explore the area before I committed to buying a house,” Gaton said. “Renting first was just the best way to avoid making the wrong decision.”

The decision to rent bought her time to find a nearly half-million dollar home in Stallings, which she’ll close on later this year.

“I think there’s a stigma,” she said of renters. “I was kind of scared, like, ‘What kind of people would rent?’ But, I’m one of them.”

Two top SFR companies respond

Tricon Residential bought the second most homes in the area of all SFR companies from October 2020 to October 2021, according to the Charlotte Journalism Collaborative’s data analysis.

“There is as much a shortage of homes in the rental housing market as in the home buying market, perhaps more so,” Tricon Residential Chief Operating Officer Kevin Baldridge said in a statement. “According to the US Census Bureau, over the last five years, the amount of owner-occupied housing in the US has increased ten percent while the amount of rental housing has increased just one percent. In 2020 alone, the amount of rental housing declined by over 275,000 homes, an amount nearly equal to the total number of homes owned nationwide by large single-family rental home companies. We receive up to 10,000 leasing inquiries each week across the country for an average of just 200 to 300 available homes. To meet this extraordinary renter demand, we’re providing needed supply through the thoughtful acquisition of existing homes and developing new build-to-rent communities. We believe that build-to-rent is a part of a longer-term solution to help meet demand and provide individuals and families with additional housing options.”

Baldridge said the company’s properties are “actively maintained to a common professional standard.”

According to the data, FirstKey Homes bought more properties than any other SFR company between October 2020 and October 2021.

“Rising home prices and competition are a confluence of many factors, including insufficient housing supply, low-interest rates, migration to suburban communities, and a massive shift to remote working, not the negligible two-tenths of one percent of the homes we manage in these counties,” FirstKey Chief Communications Officer Michael Torres said in a statement. “Everyday homebuyers continue to purchase most homes, with the percentage of first-time buyers who successfully purchased properties rising to 34% of all buyers over the past year, up from 31% in 2020. We’re proud to offer single-family homes for people who choose or need to rent.”

Neighborhoods and sellers are now reacting

A report by the UNC Charlotte Urban Institute identified more than 11,000 single-family homes in Mecklenburg County alone currently owned by Wall-Street-backed landlords in June, accounting for 4.3% of all single-family homes.

In response to the trend, some neighborhoods have changed their rules to try and preserve communities that are predominantly owner-occupied. Highland Creek, for example, changed its rules last year to limit rentals for the first year after a sale, according to a covenant amendment. The president of the Highland Creek Community Association said the change has already made an impact.

“We have seen a huge difference and the word is out that Highland Creek doesn’t let investors in the neighborhood,” President Rob Valencia said. “Huge success for the community.”

The Avalon at Mallard Creek Townhomes changed its covenant too to add a waiting period and placed a cap on the number of units that could be leased.

In addition to neighborhoods taking a stand, some sellers have started refusing to sell to investors too. 

“I think if there is a concerted effort between homeowner and buyer to sell to people, that would kind of start to reduce this trend a little bit,” Osman said.

“If the HOA’s would step up and the sellers would step up and say, ‘We’re not doing it. We want actual people in our communities,’ then I think we would be in a better place,” Mann said.

Patience pays off

It took nine offers, but Katlyn Pflederer and her family finally found a home in their price range. Credit: Nate Morabito

After months of constant rejection, Mann helped the Pflederers close on a home in Union County last year in their price range. The $275,000 house is smaller and farther away than they had hoped, but they know it’s better than the alternative.

“It feels really good,” Pflederer said. “The kids love their school and they’ve made a friend down the street too. They’re very happy here. I’m very happy here too, my husband especially.”

What can give homebuyers an edge?

1) Make your best offer

Osman said offering the highest price and best terms can help.

“Communicating that you’re putting 10 or 20% down can help sway a seller that is concerned that the home may not appraise.”

2) A sizable due diligence

Mann said investment companies often don’t offer due diligence money, so offering a larger amount for due diligence “could be a significant positive in your offer.”

3) Ask around

If there’s a specific neighborhood or type of home you like, ask your realtor to reach out to owners in that area to see who’s thinking about selling. Osman said that realtor could work out a deal for you on a home that doesn’t hit the market.

4) Owner-occupied alert

Mann said it’s also helpful to tell the listing real estate agent that the home will be owner-occupied.

5) Choose your lender wisely

Osman recommends using a lender that gathers and underwrites your loan up front, needing only a contract and occasionally an appraisal.

“Not all lenders are the same and finding one who will make your approval the same as a cash offer (allowing for a quick due diligence period) can win the day,” he said.

What about writing a letter?

Mann said some agents frown on that approach due to potentially crossing fair housing laws. Osman discourages letter writing altogether since those letters can be used as a tool to discriminate against buyers. He said they’re outlawed in many cases. Osman added attempts to stalk a seller online is “too much.”

This story is part of I Can’t Afford to Live Here, a collaborative reporting project focused on solutions to the affordable housing crisis in Charlotte.

The Charlotte Journalism Collaborative is supported by the Local Media Project, an initiative launched by the Solutions Journalism Network with support from the Knight Foundation to strengthen and reinvigorate local media ecosystems.