With homeownership out of reach for most renters and capital returning to Class B, institutional buyers are taking a fresh look at workforce housing. But according to Ron Kutas, CEO of OneWall Communities, much of what capital believes about this asset class is simply wrong.
Start with the oldest bias: that working-class renters mean unreliable cash flow. The data tells a different story. “They’re super sticky,” Kutas says. “The good residents stay as long as you provide them with a good product and a strong service.”
Credit risk, he argues, is widely misunderstood. “The credit risk is much more micro, in that you’ve got to look at the renter individually and not at the class. As long as you are staying diligent and disciplined with your guidelines, the risk is basically the same” as any other asset class.
Credit risk, he argues, is widely misunderstood. “The credit risk is much more micro, in that you’ve got to look at the renter individually and not at the class. As long as you are staying diligent and disciplined with your guidelines, the risk is basically the same” as any other asset class.
There is also a structural shift reshaping who runs these assets. Institutional groups increasingly keep asset management in-house while outsourcing property management, and they are consolidating operators. “They’re starting to see the difficulty, as an asset manager, in overseeing five or six or 10 different property management companies,” Kutas explains. “Every management company has a different chart of accounts, a different bad debt policy, a different approval process. It becomes much harder to track data and trends across portfolios.”
For a vertically integrated operator that can standardize reporting across a portfolio, that is exactly the opening. Institutional-grade 3rd party management, applied to Class B multifamily assets, is where the value-add lives.
Property management is complex, and the best solutions come from shared incentives. Whether you’re exploring new approaches or facing specific challenges, we’re here to talk. Visit us at onewallcommunities.com or call us at (646) 596-7068.