When New Yorker Greg Rand sold his real estate brokerage firm and started a national web-based real estate business that could be headquartered anywhere, he and his wife decided to “go someplace better.”
That someplace turned out to be Charlotte.
“We had a place near Charleston, and we just loved the Carolinas,” he said. “I had a friend on Lake Norman, and we were checking out options up and down the eastern seaboard.”
He said the combination of “hospitality, a great airport, a great talent pool, then the lake living,” convinced them to settle here in June 2013.
In the New York area, Rand had taken over running Better Homes and Gardens Rand Realty from his mother. The residential and commercial brokerage had about 1,000 agents in 25 branch offices in New York and New Jersey.
In 2010, he founded OwnAmerica, an online marketplace, valuation and education service for owners of single-family rentals begun in 2010. The company capitalized on a new trend: the bulk buying by institutional investors of single-family homes to hold as rentals. There are only a couple of other companies that do something similar, and those focus on providing services to investors who are new to single-family rentals, as opposed to providing brokerage and educational services to those already in the market.
On Sept. 12, the company launched its newest endeavor, online services designed for smaller investors who own a handful of single-family rentals.
One of the benefits, Rand said, is that properties can be bought and sold without a change in tenants or management companies. Buyers “don’t have to figure all that stuff out,” he said. “It lowers their risk.”
The fact that Charlotte has been one of the nation’s most active cities for institutional investment in single-family rentals was something Rand was aware of, but he said it didn’t play into his decision to live here.
Rand is also the author of the book “Crash Boom: Make a Fortune in Today’s Volatile Real Estate Market,” released in 2011; has been a regular contributor on Fox News and hosted “Rand on Real Estate” on radio station WABC in New York.
The following Q&A is edited for length and clarity.
How did the idea come to you?
I’ve been in the real estate business for my whole life, running a business from the 1990s to around 2008-2009 in the New York area. When the housing crises hit, it was really clear to me that many people were misunderstanding the housing market. I believed that there would be an investment boom, and there was not a business set up to handle that. Traditional brokers want to sell houses. There are millions of people who rent homes: 12.5 percent of all the households, 15 percent of the population, live in single-family-home rentals. And there was no marketplace for rentals. (After the foreclosure crises) there were not enough rentals, so we started helping landlords buy houses and make rentals out of them.
What trends are you seeing now versus when you began the business?
The real estate market is recovered. When we started, it was right in the middle of a lot of turbulence. Our clients, during the first half of the company’s existence, were big Wall Street firms who were buying houses and turn them around into rentals. There were about 10 companies with 200,000 houses that they would buy, renovate and lease. There was nothing available to handle that. It created a new industry, the SFR market. Companies like ours had the capacity and capability to professionalize SFR where it didn’t exist before. Now, we’re taking technology and data and management systems invented for massive Wall Street services, and repositioned it for smaller investors.
The business has evolved. We were living on 12 clients for the first four years. Now we’re offering services to everyday landlords, regular people who own five or 10 houses, or even buying their first investment properties. If you own a rental, you can open a free account, use the valuation analytics, and manage your investment portfolio. Since we launched the website Sept. 12, we’ve had $850 million worth of assets put on the platform. That’s been a great launch. There’s about $110 million now in property for sale. You can see the value of yours, and decide whether to sell. Investors can buy one that’s already a rental. It used to be that you’d find a vacant one, then have to find a tenant.
I saw that there are only a couple of other companies that do this. What distinguishes OwnAmerica?
We’re different in that we’re focused on experienced owners of rental property. And the owners of those other companies – we’re all friends – they’re focused on selling you your first investment property. We help you buy more or sell.
Do you think the decline in homeownership is a long-term trend?
I actually don’t. People in my business love to amplify that. I think that millennials are just taking longer to set up their households. In the 1908s, you had a 20-year-old who, if you asked them if they wanted to own a home, would say they want to rent an apartment near the bar. Now, it’s a 30-year-old who wants to do that.
What are the greatest benefits to the economy or society of this increase in investor-owned single-family rentals?
The greatest benefit to the surge in investment is that in 2011, home prices were still on the way down, and we hit the bottom. You can’t have a recovery without stopping the slide. In 2011, home buying was down 16 percent from the prior year, but investor sales were up 65 percent. And that’s when prices started going up. So it really did heal the wound of the housing crises. It showed confidence in the market.
Also, a lot of people who bought homes had settled in, their kids were in school, then they had to leave because of the crises when their houses were foreclosed on. But they wanted to send their kids to the same classroom and not move into an apartment. Institutional investors looked at: Where will the demand be based on where the foreclosures are? So a social good was achieved.
Do you think the large-scale purchase of homes to use as rentals has artificially inflated housing prices?
We look at it market by market. If you look at all properties, we have a chart that shows the 20-year home price for each market. In almost every market, you can see a curve that shows the bubble and the resulting crash. In most cases, it leveled off at the same place it would have been if it hadn’t gone up so much and back. That gives me the confidence that the recovery was a correction. But there’s always a possibility of reverberation.
The market usually does perform in a predictable way. We messed with the housing market. There’s a little bit of the same going on now, a well-intentioned drive in Washington to increase homeownership rates. You see people going back to same play book, loosening lending standard. Bankers went haywire (leading up to the bubble), but the seed that created that opportunity was the drive to loosen standards. There’s a whiff of that in Washington now. They’re involved in a program in which renters are being encouraged to buy the homes where they rent. But they already live there, and the rent costs more than the mortgage would, so I don’t see a problem there.
How are things looking in Charlotte?
They’re looking really positive in Charlotte. I look at things in the long-term view; we don’t pay that much attention to the short-term trends. Charlotte has had significant population growth, and we predict a second wave of financial institution migration out of New York, and many of them will come here. It’s already a financial center, has good infrastructure, and people have the ability to do business without getting on an airplane because of technology. The ecosystem here is already established. And New York is driving people out, with practices that are not friendly to businesses.