Buying Homes Based on Location and Residents’ Needs
“Location, location, location.” That mantra has become something of a cliché in the real-estate industry, but only because it is so central to the home-buying process. As America’s premier single-family home leasing company, we buy and sell thousands of houses each year, and no single criteria is more important than location.
Our goal when buying any house is to find a property our future residents will love. We are looking for the same things other home-buyers seek: proximity to good schools, parks and employment centers; optimal layouts and contemporary appliances; and those often-inexplicable qualities that make one house on a block more desirable than the others. We do this a lot, so we’re pretty good at it. But when it comes to purchasing homes, we play by the same rules as everyone else, including paying the price the local market will support.
Where Do Americans Want to Live?
Invitation Homes carefully considers migration patterns when determining which markets to enter. We tend to buy homes in areas of high-growth – primarily in the sunbelt from the Southeast to the Southwest, and up the West Coast. According to census.gov, for every decade between 1950 and 2010, the growth rate of the desert Southwest was at least twice as great as that for the United States as a whole. Of course, buying homes in popular markets means we face significant competition.
The number of homes we actually purchase is a drop in the bucket in these desirable markets. Overall, Invitation Homes represents a small sliver of homes purchased each year in the U.S. As an example, in the fourth quarter of last year, we bought just over 100 houses across the entire Western U.S., including booming cities like Phoenix, Las Vegas, Denver and Seattle. Over that same period, we also sold slightly less than 100 homes in the region, roughly breaking even for the quarter.
How Do We Choose the Home Itself?
When choosing to buy a home, our highly skilled and experienced internal buy team has two basic guiding principles. First, the home must be in a desirable location. And second, the home must be high-quality and meet the needs of our residents.
First, our homes must be in a desirable location. Through our resident surveys, we’ve found that top priorities include safe neighborhoods and close proximity to good schools, transportation corridors and employment centers.
Once we’ve determined a home meets these criteria, we then dive deeper into determining which of the available homes would be most suitable in making good homes for our residents. And we then follow the same process as an individual buyer.
Invitation Homes strives to maintain high standards for the homes we offer our residents. So, what does our ideal home look like? It differs from market to market, but our checklist should sound familiar to any family looking for a house. In most of our markets, the ideal home is three bedrooms with two baths, has an attached parking structure, and is somewhere between 1,700 and 2,400 square feet. We work to ensure that the floor plan is convenient and meets the lifestyle needs of our residents. We also consider how well the home has been maintained.
How Do We Find Homes?
Just like other Americans, Invitation Homes has recognized the changing nature of the home buying process. Much of the information we receive on homes available for purchase comes from publicly-available listing services like Zillow, realtor.com and Trulia. Once we find a home we’d like to purchase, we follow the traditional route of working with a real estate agent or broker to make an offer on the home.
We also continue to work with the new breed of algorithm-driven companies called “iBuyers,” which make an offer on a home sight unseen and then take responsibility for owning, marketing and reselling the home. These iBuyers have dramatically shifted the housing industry landscape in that they’ve made the home selling process simpler and less burdensome for the average seller. We anticipate that this new acquisition channel will continue to develop in the coming years, and that it will benefit sellers and buyers alike, including Invitation Homes and the single-family rental space as a whole.
Looking Toward the Future
Despite our scale, the Invitation Homes home buying process is quite similar to other home buyers. We do our homework and then compete just like anyone else. And, like many aspects of society, we will look to technology to make this process easier. Regardless of the method, we will continue to grow our portfolio by purchasing homes based on where Americans want to live and the criteria our residents desire in their homes. And we will strive every day to work with our residents to live our mission – Together with you, we make a house a home. To view available homes, visit InvitationHomes.com.