If you think you have your hands full with owning and caring for one house, consider the challenge faced by Gene Isaacs. He has 20,000. And they're in dozens of suburbs and cities from coast to coast.
Isaacs is the undisputed Mr. Big of the American single-family-home field. He rents out, manages and serves as landlord to more rental houses and condominiums than anyone in the United States.
He controls so many homes in so many markets that he's a walking real estate barometer.
He can tell you with mathematical precision what types of small-scale rental investments yield the most profit in what market.
He can tell you what cities and suburbs show early signs of bouncing back from slumps, and what metropolitan markets are softer than their reputations.
He can tell you where condominiums pull in more money per dollar of value than conventional detached homes, and where they don't.
Isaacs heads Epic Realty Services Inc., based in McLean. His firm functions as a super-landlord for rental-home, limited partnerships formerly controlled by a now-defunct investment firm, Equity Programs Investment Corp.
The rental homes range in market value from the bare-bones $50,000 type up to the $350,000 level. They are concentrated in major Eastern, Southern, Midwestern and Western markets, primarily in suburban communities.
What makes Isaacs' perspective particularly helpful to anyone interested in residential real estate is his month-to-month computer tracking of rent levels, real estate values, vacancy rates and financial returns.
He recently completed a comprehensive study of 16,000 of his houses, and agreed to share some of the findings.
For starters, Isaacs' data show clearly why smaller is often better in rental homes.
In almost every market, according to Isaacs, the lower the relative price level of the house, the higher the rental yield per month.
Example: In California, Isaacs has 257 houses in the $85,000 appraised-value range. They rent for an average of $604 per month, or 9.35 percent of their market value per year.
Isaacs' 123 California houses in the $200,000 range, by contrast, bring in an average $l,021 per month in rent, 7 percent of value. His 92 homes in the state worth $350,000 or more yield barely 5.3 percent.
The same pattern prevails 3,000 miles to the East.
Isaacs' rock-bottom houses ($50,000 to $60,000) in New Jersey, Florida, Maryland and Pennsylvania pay him 12 to 15 percent of value per year in rent. Yet his homes in the $250,000 to $350,000 range yield 5 to 6 percent on average.
Modest-priced houses in Midwestern markets in Ohio, Illinois and Indiana show similar results, but with returns in the 10 to 11 percent range for $50,000 to $60,000 units.
What about rental condos versus rental single-family homes?
If you guessed that detached houses are the rent winners nationwide, you're right. But there are plenty of noteworthy exceptions.
Take Georgia and Virginia. Isaacs rents large numbers of condos and conventional homes in both states.
In the Atlanta metro area, Isaacs' condos in the $70,000 bracket pull in an average 9.52 percent of value per year, slightly more than similarly priced detached homes. His $85,000 condos command an even higher spread.
Or take Virginia. In every value category up to $125,000, Isaacs' Virginia rental condos yield more than conventional houses.
Some other conclusions from Epic's nationwide survey:
If you're prepared to hold on to them for 5 to 7 years, single-family homes still offer excellent gains well above inflation.
Isaacs' New Jersey properties alone have appreciated by an average 25 to 30 percent per year for the past three years.
Beware of condos.
Although they have performed well in certain markets, Isaacs is not bullish about them in most markets because of heavy competition from the overbuilt rental-apartment sector.
Think cycles and you'll find values.
Markets like Houston are clearly bouncing back on Isaacs' charts because vacancy rates are dropping. That means it could be an opportune time to buy there, ahead of the pack.
Suburban Chicago, on the other hand, is showing higher vacancies, as middle-income renters turn into buyers.
All in all, in the words of a man with 20,000 homes on his hands, the single-family, rental-investment market looks "intriguing and profitable."
So promising that Isaacs is seeking hundreds more for his portfolio.