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HUD Rental Survey Finds Tons of Small Investors

The U.S. has 49.5M rental units, and 46% are in buildings with four units or less. Of those, mom-and-pop investors own 70% – 1 out of 3 units nationwide.

WASHINGTON, D.C. – Out of the 49.5 million rental housing units in the U.S., nearly 46% are located in properties with one-to-four units, according to the latest Rental Housing Finance Survey (RHFS) released by the U.S. Department of Housing and Urban Development (HUD) and the U.S. Census Bureau.

Of those small rental properties, individual investors own 70% (15.9 million). And of those, more than one-third (8.1 million) have a mortgage or similar debt.

“The Rental Housing Finance Survey provides insight on the financial, managerial and physical characteristics of rental properties nationwide,” says Solomon Greene, HUD’s principal deputy assistant secretary for policy development and research. “Given that the survey was in the field during 2021, it will help the Administration to better understand how rental property owners responded to the COVID-19 pandemic.”

HUD funds the Rental Housing Finance Survey and the Census Bureau collects the information every three years. It’s a comprehensive survey of rental housing properties in the United States, covering topics such as property configuration, ownership and management, rental income and expenses, financing, and capital improvements and expenses.

The current release includes summary tables. A public-use file of microdata will be released later in December.

Below are highlights from the national level findings among the 19.3 million rental properties, which contain 49.5 million rental units.

Rental property survey highlights

  • About 86% of all rental properties contain only one unit.
  • About one-third of all investor-owned properties with one rental unit and another one-third of rental units are within properties that have 150 or more rental units.

Ownership and management

  • Individual investors own about 70% of rental properties and 38% of individual rental units. Limited liability corporations own 15% of rental properties and 40% of individual units. For properties with 150 or more units, limited liability corporations or partnerships own 67%.
  • About 22% of small rental properties (1-4 units) are managed professionally, while 84% of properties with 150 or more units are managed professionally.

Rental income and expenses

  • The median monthly rental receipt per rental unit in 2021 is $1000. Three years earlier it was $750.
  • The median monthly operating expense (not including debt service) is $380 per rental unit.

Property purchase, value, and financing

  • The median estimated market value per rental unit is $175,000.
  • The median purchase price per rental unit is $99,000 (not adjusted for inflation).
  • About 41% of all rental properties have a mortgage or similar debt, compared with 35% of all rental properties that had a mortgage or similar debt three years earlier.
  • For properties with a mortgage, the median debt per rental unit is $180,000 at mortgage origination (not adjusted for inflation), compared with $119,200 in the 2018 RHFS.

Capital Expenses and Improvements

  • About 76% of property owners reported making some type of capital improvement to their rental property in 2020.
  • Owners annually spend a median of $840 per rental unit on capital improvements.

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