Rental housing plays a vital role in communities across the country, providing millions of individuals and families with safe and comfortable homes. Unfortunately, aspects of the apartment industry can be mischaracterized, leading to misconceptions about its business models and impact. The National Apartment Association’s (NAA) Independent Rental Owner (IRO) Committee wants to shed light on the realities of rental housing, addressing some misconceptions and presenting a clearer picture of the industry.
What Exactly Is an IRO?
Smaller rental portfolios—sometimes referred to as “mom-and-pop” housing providers—are independent rental owners. IROs are an individual or individuals that are active in both the ownership and management of their properties. IROs can be smaller in scale or have multiple properties. They’re often on call 24/7 to help their residents and respond to emergencies. IROs are individuals who have invested their hard-earned savings into providing quality housing options for their residents, and this is how IROs pay their own bills, make a living and set aside for retirement.
Contrary to popular belief, smaller owners make up the majority of the apartment industry. In fact, the National Association of Realtors notes that 46% of the nation’s 49.5 million rental units are small properties – those with just 1-4 units – and a whopping 70% of these properties are owned and operated by smaller housing providers. By acknowledging the significant presence of IROs, we can better appreciate the diverse range of rental housing options available to individuals and families across the nation.
Operating on Narrow Profit Margins
IROs – like the broader rental housing industry – do not operate on high-profit margins. A significant portion of the revenue generated from rent is reinvested back into the property and community. Approximately 91 cents of every dollar of rent goes toward essential spends such as staffing, maintenance and critical expenses like property taxes and insurance, those necessary to ensure that rental housing remains operational for generations to come. By understanding the financial realities faced by IROs, a more balanced perspective on the industry’s operations can be fostered.
IROs are Integral to Community
Independent rental owners are far from distant operators, they are our neighbors and an integral part of our communities—often living onsite at smaller communities. They are teachers, emergency services professionals and members of various other professions, actively contributing to the well-being of society beyond their roles as rental property owners. For many, this is their one and only position—to provide housing as an independent rental owner.
Linda Morris, a member of the NAA IRO Committee and President of Cambridge Management Company said, “As a rental property owner, we take pride in providing homes where our residents enjoy living. We strive to ensure our residents are well taken care of while living at their properties.”
Further, IROs demonstrate their commitment to the community through charitable giving to residents and the surrounding area. This includes delivering holiday cards to residents and working with the local community on food and clothing drives with different organizations. These acts of generosity not only support local organizations and initiatives but also exemplify the genuine care and dedication IROs have for their local communities.
As we reflect on the realities of the rental housing industry, it is crucial to dispel misconceptions and acknowledge the contributions of IROs. These dedicated individuals, who comprise the majority of the industry, provide diverse housing options and invest in their communities. By recognizing the financial constraints they face and the positive impact they have on communities, we can foster a more accurate understanding of the rental housing industry. Let us celebrate the essential role IROs play as neighbors, professionals, community members and housing providers.
What’s Next
During the coming months, this column will continue to explore unique topics within the IRO community. In each, we’ll identify practical solutions and helpful hints for smaller owners nationwide.
In case you missed it, read our first column.
NAA’s Independent Rental Owner Committee
The IRO Perspective Column is a thought leadership endeavor powered by NAA’s Independent Rental Owner (IRO) Committee, which advocates for all independent owners to the Board of Directors and Assembly of Delegates. NAA defines an IRO as an individual or individuals that are active in both the ownership and management of their properties. For more information and resources designed specifically for IROs, please visit NAA’s website.