#Software

Property Management

Several dynamics in the real estate sector – including high interest rates, low housing affordability and inventory, and shifting demographics – are driving more Americans to continue to rent, rather than buy, their first home.

We believe the single-family rental market is the least mature sector within real estate with the most opportunity to improve both the tenant and owner experience through technology and tech-enabled services. We welcome companies and intermediaries working in this space to contact Cheng Li about opportunities to invest in and help support their growth.

 

The Single-Family Rental market is experiencing a historic demand surge. As homeownership becomes increasingly out of reach, the market presents ripe opportunities for real estate investors, who already see SFR as a premier asset class. This demand also unveils the inefficiencies in legacy property management, highlighting the need for technology to help navigate the complex regulatory environment and streamline operations.

Cheng Li, Principal at LLR Partners

What trends make it a great time to be in the Single Family Rental (SFR) market?

Shifting Demographics and Housing Preferences

  • Millennials and Gen Z are now the largest groups of home buyers as of 20241
  • Flexibility and less financial risk prompt these groups to rent, with remote work boosting this trend as of 20232
  • Demand for rental housing has increased as a result, leading to record-high occupancy rates and demand outpacing supply3

Economic and Regulatory Factors

  • Rising homeownership costs versus stagnant wages have made renting more appealing than buying as of 20243
  • Low-rate mortgage holders are opting to rent out old homes post-move as of 20234, creating an influx of new landlords prime for software use
  • Increasing tenant protection laws adds complexity, driving the need for software in rental management

Demand Driven by “Mom-and-Pop” Landlords

  • ~90% of SFR investors are “mom and pop” investors, 71% of whom rate SFR as the strongest asset class in 20215
  • Individuals are increasingly looking to SFRs to build wealth, as real estate investors earn ~45% more income than non-real estate investors as of 20216
  • The SFR housing shortage in the U.S. has reduced vacancy rates and created a steadier income for landlords as of 20243

Operational Inefficiencies in Property Management

  • Both third-party property managers and self-managers in the SFR market suffer from inefficiencies in tech and operations, signaling an opportunity for innovation
  • Many self-managers juggle full-time jobs alongside their rental management, indicating a market for tech and tech-enabled services

Large, growing market driven by high demand and low tech adoption

6.5M
7
shortage of single family homes in the U.S. to meet demand
14-17M
5
individuals own at least one rental property in the U.S.
10-15%
8
of SFR owners currently leverage technology

Get to Know LLR Partners

25 Years of Investing Technology

  • Founded in 1999, LLR is a growth oriented private equity firm investing in high growth, disruptive technology companies
  • Raised more than $7.0 billion of capital across seven funds
  • We are focused on organic, topline growth initiatives and complementary acquisitions to create value for all stakeholders
  • Thesis-driven investment teams look to build fit-for-purpose strategies along side management teams.

Operational Support

  • Leverage best practices developed through codifying successful strategies across our 130+ investments since inception
  • LLR’s Value Creation Team (strategy, talent, go-to-market, product, finance, M&A) to help accelerate growth

Focus on Partnership

  • Flexible capital provider (majority or minority ownership)
  • Reward and motivate key players with equity

Investment Criteria

  • Flexible investment criteria
  • Ability to invest $40 – $150M of equity
Select Investment Experience

LLR invests in the sectors where our investment experience indicates there are attractive business models and market trends supporting strong growth potential. Here are some of our related investments.

Latest GrowthBits

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#Software
This Real Estate Trend Is Creating a New Property Management Software Market
Cheng Li & Devon Bembery

Meet the LLR Team

David Reuter

David Reuter
Cheng Li

Cheng Li
Devon Bembery

Devon Bembery
Edward McCann

Edward McCann
Ousmane Sow

Ousmane Sow
Trevor Mutolo

Trevor Mutolo
Evan Johnson

Evan Johnson

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References

  1. “Home Buyers and Sellers Generational Trends,” National Association of Realtors, 2024, https://www.nar.realtor/research-and-statistics/research-reports/home-buyer-and-seller-generational-trends 
  2. “RealPage Unveils New Multifamily Rental Trends,” 2023, https://www.realpage.com/news/realpage-unveils-new-multifamily-rental-trends/
  3. “American’s Rental Housing,” Joint Center for Housing Studies of Harvard University, 2024, https://www.jchs.harvard.edu/sites/default/files/reports/files/Harvard_JCHS_Americas_Rental_Housing_2024.pdf
  4. Dennis Rodkin, “Can’t stand to let go of that sweet mortgage rate when you move? Maybe you don’t have to,” Chicago Business, 2023, https://www.chicagobusiness.com/residential-real-estate/people-rent-former-homes-instead-selling-keep-low-mortgage-rates
  5. Drew Desilver. “As national eviction ban expires, a look at who rents and who owns in the U.S.,” Pew Research Center, 2021, https://www.pewresearch.org/short-reads/2021/08/02/as-national-eviction-ban-expires-a-look-at-who-rents-and-who-owns-in-the-u-s/
  6. Jeff Rohde. “20 surprising rental property owner statistics [2022 Edition],” Roofstock, 2021, https://learn.roofstock.com/blog/rental-property-owner-statistics
  7. Anna Bahney. “The US housing market is short 6.5 million homes,” CNN, 2023,
    https://www.cnn.com/2023/03/08/homes/housing-shortage/index.html
  8. Proprietary IGS Landlord Survey conducted for LLR Partners
Disclaimer:

The information presented herein is intended for an audience of potential LLR portfolio companies and the intermediaries supporting their capital raise processes. Named LLR investments presented herein do not reflect a complete list of LLR investments and are provided for informational purposes only. Certain statements about LLR made by portfolio company executives and other quoted parties herein are intended to illustrate the work of LLR’s Value Creation Team with such portfolio companies or reflect the individual’s perspective on the featured industry sector. Such portfolio companies are controlled by investment vehicles managed by LLR. Quoted parties were not compensated in connection with their participation, although they generally receive compensation and investment opportunities in connection with their portfolio company or Senior Operating Advisor roles, and in certain cases are also owners of portfolio company securities and/or investors in LLR-sponsored vehicles. Such compensation and investments subject participants to potential conflicts of interest in making the statements herein.