2014 Rental Outlook: Why Your Business Should Be Booming | Webinar with Nikesh Parekh, VP of New...

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2014 Rental Outlook: Why Your Business Should Be Booming

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AppFolio

Complete Solution Includes:

Web-Based Property Management Software

•Property management and accounting

•Online rent collection (free)

•Prospect / guest card tracking

•Marketing

•Website

•Payment processing

•Online applications

•Resident Screening

So You Run A More Successful Business

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Trulia

~50million users

8 top rated apps

1 = 1a lead every second

51%earn over $75K

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Polling Question

Who am I?

A. New property manager

B. Veteran property manager

C. Real estate agent doing rentals

D. Real estate agent

E. Landlord

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Polling Question

What’s my biggest concern today?

A. How to deal with economic trends

B. How to deal with demographic changes

C. How to deal with psychological factors

D. How to deal with finding owners

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Nikesh (Niki) Parekh

• VP of New Ventures, Trulia

• Rentals

• Mortgage

• New Construction

• EVP, Product, Market Leader

• CEO, ActiveRain

• VP, HouseValues

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2.

3.

4.

1. economic trends

demographic changes

technology

recommendations

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economic trends

Price gains starting to level off, but recovery climbing unevenly.

1.

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Housing Drives the Recovery

2.3%MISSING

GDP

7%

6%

5%

4%

3%

2%

1%

0%

1980 1990 2000 2010 2013

GDP

RESIDENTIAL INVESTMENT AS A PERCENTAGE OF GDP

$350BILLION

2.9MILLION

JOBS

500KNEW

HOUSE-HOLDS/YEAR

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Construction Returning & Urbanization

2014 will be the highest number of completed multi-family properties since 1999

19961997199819992000200120022003200420052006200720082009201020112012201320140

50

100

150

200

150 155

170

200

155 157

140

125

100 95 96 100110

140

100

45

75

125

160

Uni

ts (0

00’s)

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Construction Returning & Urbanization

2014 will be the highest number of completed multi-family properties since 1999

70% in Top 50Metros

-2012

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'90 '92 '94 '96 '98 '00 '02 '04 '06 '08 '10 '120

400

800

1,200

1,600

2,000

0

100

200

300

400

500

Source: Census new residential construction report, including starts purpose of construction: http://www.census.gov/construction/nrc/historical _data.

Construction Lags / Apartment Starts Boom

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The Kids Are FINALLY Moving Out…

18-34 year-olds without jobs or homes

'00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '1320%

24%

28%

32%

36%

Not Employed Living with Parents

Sources: Trulia analysis from raw data in CPS-ASEC survey: American Social and Economic Supplement, aka the “March supplement”, a joint product of the Bureau of Labor Statistics and Census. Raw data available through IPUMS-CPS: https://cps.ipums.org/cps.

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Causing Rents To Rise

Where do 2-bedroom rental prices cost more than 60% of a typical paycheck?

Affordability is a Concern

• Miami, FL (62%)• New York, NY (62%)• Los Angeles, CA (54%)• San Francisco, CA (51%)• Oakland, CA (46%)• Boston, MA (43%)• Chicago, IL (37%)• Dallas, TX (30%)

4.5% national increase in

rental prices year-over-year.

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Perfect Storm for Rentals

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1. One Word…

Demographics

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How is the rental consumer changing?

demographic changes2.

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Approaching Echo Boom

Prime years of renting for America’s largest population

15-19

20-24

25-29

30-34

35-39

40-44

45-49

50-54

55-59

60-64

65-69

70-74

75-79

“Millennials”• 67MM people ages 20 to 34

“Boomers”• 74MM people ages 51 to 69

Age Pyramid

Male Female

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Baby Boomers Are Moving Out Too

12% of properties constructed in 2012 were age-restricted (8% in 2010).

52% of seniors between the ages of 65 and 80 who had recently moved became renters (US Dept. of Housing and Urban Development).

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Approaching Echo Boom

40% of the housing market

90% will be renters

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25% are unemployed

26% are married

before 32(48% boomers)

55% have

shared a “selfie”

(9% boomers)

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Asset-Lite Mentality

“Peter Pan Syndrome”

• Don’t want to grow up

• Don’t want commitment

Debt!!!

• 25% increase in school debt since 2008

Sharing Economy

• Many are opting to share or rent with roommates.

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Is home ownership a safe investment?

Scar Tissue from Housing Crisis

Foreclosure

DEBT

BankruptcyShort Sale

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New Household Formation and Hispanics

(Decrease of 700k of non-Hispanic White households)

Over 1 million Hispanic households were formed in 2012

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Low Cost, Low Tax

From East & West

To Center &

South

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What else is happening?

Technology3.

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Mary Meeker

• Partner at KPCB

• Morgan Stanley analyst

• First to cover Internet companies like Amazon, Google & Yahoo

http://www.kpcb.com/insights/2014-internet-trends

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Mobile Internet Growing Faster Than Any Other Technology

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The Future is Mobile

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Mobile Uprise

Asset-Lite Mentality

66% of trulia

traffic is mobile

62% view other listing

during a tour

83% of millennials sleep with their phone

41% of Americans

have a social profile

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How can you take advantage of the changes?

recommendations4.

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1. Pricing Management Software

Quit calling the property next door. With all the economic changes in supply and demand, a good pricing tool will enhance your portfolio valuation.

Attract new property owners by incorporating revenue management software

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2. Must-Have – Online Tools

Owner portalOnline leasingOnline paymentsWebsiteResident portalsInspectionsAnd more…

SCALABLE online tools

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2. Get Mobile

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3. Apps are Growing

Apprageous!

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4. Diversify into Property Management

NAR reports that 10% of real estate broker are focusing on property management

Why?

• Accounts can be sold ($1,000 - 3,000, depending on the market)

• Fees can range from 6 to 10 percent of rent, plus leasing fees

• Stable income

• Access to seller and investor inventory

2003-

2007

2012-

2013

4%

10%

Real Estate Agents Focusing on PM

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5. Renters Become First Time Home Buyers

% of renters planning to buy a home in the next two years

31%Nov 2012

28%May 2012

22%Jan 2011

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6. Owners Become Investors

Repeat buyers with cash are dominating the for-sale market. Renters are remaining renters.

Impact for For-Sale Agents

32% increase in single-family rental homes from 2005 to 2012. Trend is now cooling down as investors sell properties to home owners.

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