Accidental Landlords

September 21, 2021

Accidental Landlords

People become Property Owners for a variety of reasons. Surprisingly, a large number of Property Owners never set out to be investors in the first place. Still, it is usually a good idea to own property because it is one of the most consistent ways to build wealth. The United States tax code also provides many benefits to Real Estate Professionals and Real Estate Developers. Real Estate investors can talk to their accountant and professional cost segregation experts to determine how much they can write off as depreciation.

Types of Landlords

There are three major kinds of Landlords today. Many of these people are considered "Do-It-Yourself" or DIY, have a full time job, and only rent out a property on the side.

  • Intentional Landlords are people who purchased a property with the intention of using it as an investment. Whether it is to flip the house or rent the house our, intentional investors represent roughly ~50% of the market (Buildium 2021)
  • Accidental Landlords are people who became a Landlord due to circumstance. The Landlord could have gotten a new job in a different area and decided to hold onto the property instead of sell it. These people typically do not want to get more rental properties and represent around ~30% of the market (Buildium 2021).
  • Unintentional Landlords are people who who became a Landlord due to circumstance but want to purchase more investment properties after their first property. These people represent ~20% of the market (Buildium 2021).

Landscape Today

Today, in the United States, there are more than 22.5 million rental properties (Census Bureau) with more than 48.5 million units. Renters pay more than $500 Billion (Zillow 2019) in rent each year. To put that into perspective, that number is greater than the GDP of more than 150 countries!

The Department of Housing and Urban Development estimates that more than 10 million individual investor or "mom and pop" landlords own 16.7 million properties with more than 22.7 million units. That means more than 74% (16.7/22.5) of properties and more than 46% (22.7/48.5) of units are owned by "mom and pop" investors! The National Association of Realtors (NAR) suggests a similar statistic given many individual investors choose to either hold their properties in their own names or in an LLC.

Want to hear a more shocking statistic? Many of these "mom and pop" investors actually handle the day-to-day management by themselves!

42% of [all] rental properties are run day-to-day by the owners

Opportunity

By 2030, we can expect to see some pretty massive shifts in the property technology (PropTech) industry. The industry is massive and we believe it is still the early innings.

Over the past few years, many Property Management, insurance, and other real-estate startups popped up to address serious needs for Landlords and for Tenants. We believe that many players can coexist and independently solve problems so property investing can become more streamlined.

At Nophin, we are working on a new way of financing for Landlords. By providing Landlords with money upfront, we hope Landlords will be able to use the money to grow their business, pay down debt, and treat themselves. We care deeply about providing a fair experience to Tenants and building a valuable tool to help Landlords solve their deepest pain points.

Please note: Nothing above should be construed as legal, investment, tax, nor financial advice. This content is for informational purposes only. Consult a lawyer and/or an accountant if the above is right for your personal situation.
Accidental landlord, Types of landlords, Rental property owners, Property investor types

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