Realogy Forms Single-Family Management Arm Amid Rental Boom
Realogy Holdings Corp., owner of brokerage brands Coldwell Banker and Century 21, is building a division to manage single-family homes for landlords in the growing house-rental industry.
Realogy is consolidating local operations under its NRT LLC brokerage subsidiary, which has about 20,000 properties under management. NRT, the biggest residential brokerage operator, also acquired the assets of Dallas GTF Inc., a Texas-based firm that has 1,600 rental homes under management in the Dallas/Fort Worth area, Realogy said yesterday in a statement.
Demand for quality managers has increased as mom-and-pop investors and larger companies such as Blackstone Group LP and American Homes 4 Rent buy houses scattered over wide distances that require maintenance. The industry is being bolstered by increased demand for leasing after more than 5 million homes were lost to foreclosure and as tight lending standards limit buying. The U.S. homeownership rate is at a 19-year low of 64.2%, down from a high of 69.2% in 2004.
For Realogy, the new structure will take previously acquired property-management operations and "formalize it into a division that will become, given our footprint, one of the largest in the country pretty soon," Richard Smith, chief executive officer of the Madison, N.J.-based company, said in an interview.
The U.S. rental-home industry has grown to about 14 million properties, according to Jade Rahmani, an analyst at Keefe Bruyette & Woods Inc. in New York.
Most landlords NRT works with have five to 10 homes on average, Smith said. The management division, which was formed in July, is being led by Robert Way, who most recently was senior vice president at Realogy's Title Resource Group subsidiary, according to the statement.
NRT will join just a few national single-family management firms, a group that includes Carrington Holding Co. and the Rockbridge Group, formerly FirstService Residential Realty. Jim Warren, chief operating officer for Austin, Texas-based Rockbridge, said the field has plenty of room for more companies.
"I'm excited by it because the bigger the players that enter the market, the more value landlords will receive," Warren said in an interview. "Something that gives stability to landlords can cause the industry to grow. It will give them confidence to invest more."
The new structure will give a boost to Realogy's real estate agents, said Rick Sharga, executive vice president at Carrington until about a year ago.
"This is an opportunity to stay connected to a property after the initial purchase," said Sharga, who now has the same title at Auction.com LLC., the largest U.S. online real estate auction firm. "You're probably working with the investor on the initial transactions. Now you manage the property and, at some point, you have the opportunity to sell the home again. Meanwhile, youíre working with renters who at some point may want to become buyers."
Dallas GTF, which does business as Get There First Realty, was formed in 1981 and manages more than $130 million of residential properties, mostly held by individual owners, according to the statement.