MorningStar Ratings First for SFR Property Management Company

by Tim Herriage

MorningStar Ratings First for SFR Property Management Company

by Tim Herriage

by Tim Herriage

money-in-house-profileFor as long as most of us can remember, leaders in our industry wanted single-family residential real estate real estate investment to be defined as a mainstream investment.  We all know that well-managed rentals can be a stable and profitable asset class. Now MorningStar the respected fund and investment rating agency has added further credence to the industry by scoring Renters Warehouse, first SFR portfolio and property manager in the U. S. to receive a MOR RV2 residential-vendor ranking. You may know Renters Warehouse from their effective “rent-estate” radio campaign.
BACKGROUND
The Recession of 2007 appeared to throw the assumption of rentals as stable assets into question until you realize that the billions that were made by Wall Street companies on the mortgage origination frenzy, House Price Appreciation run up, the bust and then shorting of the mortgage backed securities.
Out of the rubble came investment funds backed by major Wall Street funds who saw a significant spread between the capital cost of buying a distressed house and the potential income available from holding and renting this same house, while waiting for a market recovery. This was a major Wall Street endorsement of single-family homes as an asset class, however beyond the favorable math there was a practical gap between the idea of rental ownership and property management. With few exceptions, property management was mostly a localized business lacking uniform operational standards and certainly unfamiliar with the asset transparency and fiduciary rules necessary to serve fund business who intended to securitize and manage these performing rental homes as a public fund.
JUMPING AHEAD
Today there are at least 17 million rental houses (plus du-, tri-, four-plexes and mobile homes) in the hands of rental investors. Millions are small do-it-yourself investors managing for their own benefit. This segment amounts to nearly two thirds of all investors. Other investors have chosen not to landlord directly but to select a professional third-party property manager. Until now this was a trial and error process as there was little guidance in selecting a property manager short of word of mouth, testimonials and Yelp-style reviews.  MorningStar is beginning to change this.
In October Renters Warehouse received a favorable ranking from Morningstar Credit Ratings. Morningstar is a  nationally recognized statistical rating organization (NRSRO) offering operational risk assessments. They  assigned Renters Warehouse a MOR RV2 residential-vendor ranking indicating that the company demonstrates proficiency in managing key areas of operational risk. This is the first time Renters Warehouse has been evaluated and reviewed by Morningstar Credit Ratings.
“We’re proud to have been awarded this ranking from Morningstar Credit Ratings as it is an affirmation of our strong brand, team and commitment to excellence,” says Kevin Ortner, CEO of Renters Warehouse. The ranking considers the company’s experience; it’s management team, proprietary technology and ability to manage properties for individuals or institutions with a full suite of services. Operations and management standards are uniformly supported and measured across the company with property management, vendor management and call center systems. These systems have been customized to ensure high visibility and adherence to tenant relationship standards and success.
Unique in property management Renters Warehouse has implemented a specialized Portfolio Services Division led by Chief Investment Officer and President of the division, Anthony Cazazian. “Investors with fiduciary duties can take particular comfort in knowing that our operations have been evaluated by an independent third party, something all investors should take into consideration when selecting a property manager,”
The company, formerly a franchisor, has restructured as a single entity, buying back franchises and acquiring other strategically positioned property managers. Renters Warehouse has doubled its national footprint in the last 18 months, now operates 32 offices in 18 states.
WHAT CAN INVESTORS EXPECT?
Expect this trend to expand as property management and other single-family residential investor focused businesses improve service standards and seek third party operational and credit recognition from entities like Morning. This is long overdue in our business and is endorsed by 2020 REI Group of Companies. In full disclosure, 2020 REI uses Renters Warehouse for property and portfolio management services.

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