Welcome to Citi's 2024 Global Property CEO Conference. I'm Nick Joseph. Here with Eric Wolfe with Citi Research, and we are pleased to have with us Invitation Homes and CEO Dallas Tanner. This session is for Citi clients only. If media or other individuals are on the line, please disconnect now. Disclosures are available on the webcast and at the AV desk. For those in the room or the webcast, you can go to LiveQA and enter code GPC24 to submit any questions if you do not wish to raise your hand. Dallas, we'll turn it over to you to introduce your company and team, provide any opening remarks, tell the audience the top reasons an investor should buy your stock today, and then we'll get into Q&A.
Awesome. Thanks, guys. It's great to be with everyone. Nick, thanks for hosting us once again. To my right, Scott McLaughlin, our Head of Investor Relations, Jon Olsen, our Chief Financial Officer, to my left, Charles Young, our COO and President, and all the way to the left, a friendly face to you all, our new Chief Investment Officer, Scott Eisen. Anyway, a lot of Scotts up here. Thanks for having us today, guys. A couple of opening thoughts. One, attractive sector, really attractive company, cheap price. I think that's why you should buy the stock today. Two, as we sit here and we go into 2024, our company's as full as it's ever been pre-pandemic, going back to pre-pandemic at 97.6. We're seeing renewals in a customer that's as steady and predictable as we've seen sort of in the history of our company.
We continue to renew at a rate above 75%. We're seeing those kind of renewal rates at this time of the year in the high fives. It's a very effective cash flow. Same Store new lease growth continues to accelerate. As we mentioned on our call earlier this year, we expect some of that seasonality. We got a little bit aggressive on getting full towards the end of the year, but it's doing exactly what we thought it would do going into spring. Then I'd say a couple of months ago, we talked about Third-Party Management and what we were wanting to try to do there. At this point in our business, we have over 100,000+ homes across our 16 markets. We have markets like Atlanta with close to 18,000 doors, markets like Phoenix, Miami, close to 14,000-15,000 doors.
The economies of scale that we're going to start to be able to benefit from in our business with the accelerated door count, the ability to enhance services, better breadth in how we can operate our business and think about piloting new programs, is just getting started. We see a lot of blue sky that centers around the customer experience, some of our ancillary programs, and more importantly, our ability to drive down costs in other parts of our customers' lives because of that scale. Most companies don't have the type of scale we have in one market, and it's going to lend itself to some really interesting opportunities for the foreseeable future. The other thing that we like about 3PM, as we call it, is it allows us to get under the hood early on portfolios that we'll likely try to be competitive on later.
We view that as another external growth story for us as well. We'll continue to find ways to invest it creatively, both on balance sheet and off. From a capital recycling perspective, we're continually selling homes in the high threes, low fours, reinvesting in new product, typically that's north of a 6% yield on cost going in day one. Then I think lastly, as we think about where the customer is, we continue to be amazed at the quality of our customer. Between the free credit reporting that we offer to over 115,000 people that have taken advantage of it, we continue to see a customer that's coming in in a rent income ratio of 5.3-5.4 times. A customer spending 17%-18% of its monthly wages on a rent or a total pay that's roughly $1,200 cheaper than it would be to own that home today.
All of this sets itself up for a really strong year for Invitation Homes for 2024. So our goal to kind of continue to focus on leaning in, driving the best margin expansion we can in the business while finding ways to grow.
Okay. Great. You mentioned on the call that when you were in the Q4 , you were putting out renewals in the nines, but your message to the team was, "Let's keep occupancy high, negotiate." And I think you sort of ended up kind of in this high fives range. But as you mentioned, your occupancy today is at a record of 97.6%. So what's the message to the team now?
Got it. Yeah. So as Dallas said, we're right where we wanted to be as we went into 2024. We wanted to get as full as we could. We saw some seasonality last year. We were trying to catch up from the lease compliance turnover that happened. And so we got to that kind of mid-97s, and we're pivoting towards getting to that rent growth opportunity as the spring comes. And that's exactly what happened. You can see where we are from January to February: 280 basis point acceleration on new lease rent growth in one month while increasing occupancy as well. So the message to the team are we're staying steady on renewals. As we go out, we want to stay occupied through the year. That's part of our goal, is to stay in that kind of mid-97s. At the same time, we want to capture the rent growth.
It really happens on the new lease side. The renewals we expect are going to kind of hang steady where we are, go up and down a little bit. When you get back to pre-pandemic levels, that's pretty much what happened historically, is kind of steady on renewals and you capture on the new lease side. So that's the message to the team, is try to optimize like we always have, but take advantage of peak season that's coming. And we're poised well to take advantage of it.
Yeah. And I mean, just given everything that seems to be working in your favor, low turnover, obviously the housing market is not much of competition for you today. I mean, is there any reason to believe that we wouldn't start seeing sort of new lease rates and pricing power that's more in the fours and the fives versus the ones that you're seeing now? Is that a good expectation for the peak leasing season?
Yeah. We're set up well going into peak leasing. We're early in the season. You can see where we ended up in February. We expect March will continue to accelerate. If you go back to historical seasonality, we will typically, on the new lease side, peak out around June or July. And typically, those renewals, those new leases will be at or above where we are on renewals. And I don't see anything see why it wouldn't be similar this year, but we'll have to see how it goes. I like our momentum. I like our occupancy. To your point, we have good pricing position given our occupancy, and demand is here. Turnover's low. So we're optimistic to where we're going to end for the summer.
Okay. And then maybe just one last question on that. One of the most frequent things I get asked is sort of the difference in strategy or market mix versus you and AMH. Obviously, you have this sort of only one, I guess, one competitor now and the public competitor in the space. So I mean, would you say that the new lease rates that you're seeing today and the difference versus AMH is really just a difference in strategy, or do you think there is a market mix or other things or comp or whatever issue that's kind of making yours look a little bit lower? I know your occupancy is actually moving higher while theirs is moving lower, so that's part of it as well.
Yeah. I think you have to look at everything kind of in its whole, right? So first and foremost, we had years of outperformance on the new lease side and on the renewal side. So we probably have a little bit less embedded loss to lease going into, call it, the last part of 2023. All things being equal, I think Charles said it really well, we really leaned in. We wanted to get full through Q4 as we headed into Q1. And that was strategic and by design for a number of reasons. One, you have to remember the headline number of the new lease growth can cause everyone to go, "Wow, that's either really high or it's really low." But the reality is it's only 20%-25% of our rate. 75%-78% of our rate are renewals at 5%, in some markets, 6%.
So leaning in on the renewal side of the business and focusing on staying full, maybe we gave up a little bit on the new lease in Q4, but the curve of this is playing out exactly like how we thought it would. We knew that December and January would be sort of on the lower end. We expected to get back to normal seasonality patterns like we've said before. So whether that has a four handle or a five handle on it this summer, time will tell. We'll see how the market plays out. But I think that's more of it than anything. It's more kind of by design the way that we decided to lean in in Q4.
Yeah. I'll just add, our strategy is really to optimize to revenue. It's a balance of occupancy, rate, renewals, new lease. There's a lot of focus, obviously, on the new lease, but we set ourselves up to get it to a position where we can optimize on revenue and ultimately lead to a creative NOI. That's the focus as we look at it.
Dallas, you mentioned economies of scale a couple of times in your opening remarks, both, I think, at the sort of national level and then also within markets, you having certain scale in certain markets. What does that allow you to do that you couldn't do before? And if I think about it, you're already a large portfolio. So as you say, go from 14,000 of managed properties to 50,000 or whatever it ends up being, what does that allow you to do differently than you're doing today?
Well, for one, I mean, just the basics. It allows you to reduce headcount over scale, right? So homes per employee, some of the metrics that we look at as we get more and more efficient, our labor costs get more efficient. You think about what happens in procurement. Just take a market like Atlanta where we now have 18,000 doors. Our pricing with vendors changes dramatically when we tell them that we're going to add 4,000, 5,000 units into that ecosystem that they already get quite a bit of work from. So the fixed nature of our pricing comes down as we spread it out across more scale. And then we can also get a bit more creative with things like route optimization with our maintenance techs, the way we think about portfolio optimization.
It allows us to just lean in in a number of different areas with that kind of headcount. The other thing that's sort of cool about it is it allows us to also kind of take a step back and kind of rethink our design of how we run these markets when they get to this sort of scale. Now, the high-touch approach of maintenance and service and things like that, that's not going to change. We're just going to get more efficient. From an organizational structure standpoint, we should get better. It should allow us to lean in. The quality of the types of people you can hire to run 20,000 units in a market versus 2,000 or 3,000 units in a market. It's a night-and-day difference.
And so that expertise that you're bringing into your business over time, obviously, has sort of a rising tide effect across your organization. But scale's your friend. The more you have of it, the better you can be, the more you can price, the more you get data back quicker, the smarter you get on your rent rules, the way you think about your revenue curve, all of that gets better and better with size, scale, and data.
Gotcha. And is there any—I mean, what are you trying to do to minimize the risk around it? Because obviously, I would assume that you have this wholly owned portfolio where, obviously, investors are looking at, to the detail, what month new lease and renewals are. But then you have this managed portfolio, which you're also obviously trying to optimize operation there. Is there any potential just for distraction, do you think, in terms of prioritizing one over the other just as you digest the new 14,000 units over the next year? What are you doing to make sure that it's seamless for both them and yourself?
It's a really great question. I'll just say, Charles, if you want to add anything, feel free to. First, it's already been digested. That's been sort of the aha moment for us was how quickly we're able to onboard and get these into our system. I think to your point, what you want to be really careful of and with which our systems are set up is our teams don't know what is an Invitation Homes home versus a joint venture home versus a third-party management home. To be really clear, we're not interested in having professional management agreements with companies that want us to run their assets any different than we would run ours. For us, it's a nice-to-have, not necessarily a need-to-have.
The nice-to-have comes with scale and the right professional capital and the right professional partner that wants an Invitation Homes playbook, so to speak. That's how we position ourselves. I think as you think about where can this go, we don't believe that the first account that we've added is the last account. But we're only interested in partners that want to run a single-family rental strategy the way we want to run it, which is how do you lean in and capture as much market rate as possible? How do you be as efficient as you can on turns as possible? And also, how do you spend the appropriate amount of CapEx where needed?
And so it's got to kind of tick those three boxes for us to be a partner that could fit in because, to your point, we don't want anyone in the field to have to think about our book different than anybody else's book. There's not two different sets of instructions on how to run the properties.
Well said.
Certainly, I mean, it's getting a little bit to be an easier labor market but still somewhat challenging. I mean, have you made all the hires that you would have needed to to sort of scale at that level?
Yeah. Generally, we knew we were going to integrate in mid-January last month. And so we were able to get out ahead of most of that hiring. I'd say we're 90%-95% there to maybe a few kind of central team members that we're looking at as we think about growing this business longer term. But we were able to hit the ground running. The biggest markets where we had the highest number of homes were Phoenix and Atlanta. And we were able to staff up and, as Dallas said, integrate in a couple of days. And we're operating as we go and partnering with our client to make sure that we're delivering the service that we expect to deliver to them and they expect of us.
Can I just add one thing? I think shareholders should be excited about this sort of leg in our stool for a variety of reasons. One, there are a number of small to midsize operators out there that have great real estate, but they don't have the same sort of margin profile that some of the bigger companies, right, have. And so as you start to think about that landscape, there might be somewhere between 30-65 companies between 5,000-20,000 units in the market. And every quarter, because we hear it, they measure themselves relative to where our margins and our operating margins are. And so I view this as not only a current sort of blue sky opportunity for the company, but that pool of companies is going to continue to grow over time.
This is going to be a normal course for our business to look at these opportunities as strategic. You get more intelligence on how these portfolios are behaving. It should add to our overall pricing power because we'll understand what's happening across more homes, across a wider swath within our markets.
How are those conversations or inbounds going since the initial announcement? As you think about signing contracts with other portfolio owners, are the economics similar to the one that you've already announced, or are each negotiable?
I think they will be. I mean, you might have some small nuance here or there depending on what's going on with capital structure and partner-level sort of discussions. But look, when we made the announcement, we figured it would make a splash. And we've certainly had a number of inbounds. And so we'll continue to evaluate those. We're talking to a few folks. And I hope that we have more to announce over the next year, year and a half. I just think it's not rocket science. If we can onboard these assets and run them the same way we run our own book, we should have a lot of opportunity in front of it.
I guess to that, the financial contribution that you're seeing this year is bigger than I would have thought just given the 14,000 homes and what we, I guess, tried to calculate. It looks like it's about $12 million of earnings. You spoke a little bit on the call, but I guess what I'm trying to figure out is, is that $12 million a true recurring number, or is there sort of higher asset management fees in the beginning based on whatever selling certain homes, buying new homes? Is that $12 million run rate, good run rate going into next year? And is that a good way to think about, if you take another 14,000 homes down, will you get another $12 million from that? Trying to figure out the economics as you scale the business.
I think it's a pretty good run rate. I think the economics for incremental deals will probably have some amount of variation. And I think more of the variability is around what is the level of asset management services they're looking for us to provide. But I think from where we sit, our view has been we've built a really powerful platform that has delivered fairly consistent and attractive results. And I think the reality is if folks want to see those kind of results in their book, we have a view on what the economics should be to Invitation Homes. And I think there are degrees of freedom, but ultimately, I think that contribution represents a fairly consistent run rate for this portfolio and I would hope is representative of future deals.
Got it. And last question on property management business. And obviously, anyone, feel free to chime in with questions. But is there any limit to sort of how much you would manage in any market or submarket just given whether it's regulatory concerns or other concerns, just a limit in terms of the percentage of homes in those markets?
We haven't had to think about that at this point. I mean, if we follow just the multifamily playbook, it's sort of standard that in some of these big MSAs, you can have tens of thousands of units in your business. So no, but I think it's something we'll be cognizant of.
Sure.
Any other questions? So switching to external growth, could you maybe sort of help us understand sort of what's embedded in your guidance in terms of that $800 million of acquisitions? It sounds like it's primarily coming through your builder program, but sort of where conversations are with them, what types of yields you're targeting, IRRs?
Sure. In terms of the growth this year, our primary.
That might need to be pushed.
Sure. You're good.
No, I'm good. Sorry. It was off. In terms of growth this year on the builder side, obviously, you've seen what we've announced with Pulte to date and with Lennar. We continue to expand our dialogue with many of the both largest builders in the country and also some of the midsize builders. We are at the point in the dialogue where what we're really trying to do with the builders is get earlier in the chain with them. Many builders might have that end-of-quarter tape where they've just got inventory that's the last 10 or 20 homes in a community that they're trying to get rid of at the end of the quarter. We'll look at those deals. But where we really want to be in dialogue with the builders is, what community are you starting? You might have 300 homes in a community.
Can we engage with them early in the process to potentially take down a third of that community? Or if someone's doing an 800-home master plan, can we carve out 200 homes of that master plan as a builder-rent dedicated community? And so really, when we think about building the pipeline, we've got probably at this point, we've expanded that dialogue to at least half a dozen builders. And we'd like it to be with even more. And so as we think about how we do the growth on a going forward basis, sourcing more product in that builder-rent category is clearly a growth objective for us on a going forward basis.
Obviously, we're in a pretty volatile capital markets environment. How do you determine the right sort of pricing for that and IRRs when you kind of have interest rates that are moving up and down between 5%-3.5%?
When we work on these communities, what we do is we work with the builders on pricing. We have forward visibility. We try to lock in what the cost of that community is. And so the denominator is pretty close to fixed pricing. There may be some amount of escalator, or there may be a collar on pricing. But we have certainty in terms of where that community gets delivered. Obviously, we then, when we get delivered a rent-ready home, that's when we start the leasing process. And so we're underwriting rents today where we think they are on an untrended basis. But I would say, generally speaking, when we're talking to these builders and again, as Dallas said, we're sort of targeting in that ±6 untrended yield for where we think the market is for the communities today.
I mean, you think about your ability to sell homes in the 3s or 4s, and you can buy in the high 5s, 6s. I mean, it effectively sounds like you can buy it, call it a 33% discount, to prices you're seeing on the MLS. I mean, it's a pretty incredible value creation mechanism. I mean, how long can that really last? I'm not sure I've actually ever seen something where you can have such a difference between selling to an individual buyer versus a deal that you're doing with a homebuilder at a high 5. Can that spread stay? And why wouldn't they just sell to an individual buyer at a.
Go ahead. I'll jump in after that.
Well, I think with the builders, the builders are in the production business. They want to be able to build and create as much housing as they can for the American consumer. We're also in that business. Our dialogue with the builders and Dallas has said on other calls that the builders, sure, they can always make more money selling a home to a retail customer. They're probably selling that home to us at a slightly lower price with a slightly lower margin. Maybe it's got finishes that are more appropriate for a renter as opposed to an owner. But I think the builders, they recognize that it's kind of like automakers and fleet sales. I stole Dallas's expression on fleet sales. But they think of this as having a consistent institutional buyer like ourselves.
Look, we're never going to take down 100% of the inventory from a homebuilder. But for homebuilders to have a dedicated business line that's a repeatable business that they can do with ourselves and other institutional buyers like ourselves for some percentage of their annual volume is just another source of revenue growth for the builders. And so they recognize that they could always get a higher price and a higher margin on a retail home. But for them, in terms of thinking about consistent earnings growth as public companies and private companies, it's a business line that they want to expand. And they want to do it with buyers like ourselves.
If I think about the home sales side, you have $500 million in your guidance. How did you come up with that number? Is that just the maximum that you think you can do based on where you think you're going to see turnovers, the limited amount of turnover in your portfolio? Why $500 million and not $800 million?
Well, I think anytime we look at the year, I mean, we know how much cash the business generates, right, in terms of free cash flow. We know how many commitments we have currently outstanding on that new product as it comes in. And then to your point, we take a sort of educated look at if we wanted to accelerate some dispositions throughout the year and recycle capital. That sort of helps get us to our base case. That number can certainly flex. I mean, we have a pretty good history at this point of selling somewhere between 1,000 and 2,000 homes a year in these markets where maybe the capital markets aren't in our favor and then recycling that capital into very creative cash flow.
So I wouldn't get too hung up on that. That's why we try to give a range because we say, "Hey, based on what we're seeing real-time right now" and I want to go back to your question on that 33% delta. "But based on what we're seeing now, this feels pretty reasonable." We also aren't in the business of going in and moving people out of leases so we can sell homes, right? We do this very methodically. We do it with a social consciousness to it. So as we think about markets like Southern California, where some of our homes may be worth a 3 cap, we have to wait until that homes becomes available to actually consider that disposition and then recycling that into a couple of other homes across the country.
To your point around fundamentals and why can we get such a premium right now on the book relative to where we can deploy that capital, I think it has more to do with sort of the villain out there and the supply story. And I think if I'm bullish on any single fundamental that sits around our business, it's the supply factors that are candidly going to continue to put pressure on housing costs and the cost of housing. Now, that will not be a problem that solves itself overnight. But we need to, as a good capital allocator, be smart and take advantage of that when it's in our favor. Now, if you go back a couple of years ago when maybe cost of capital was in the high 4s or low 5s, you were still selling homes at a 4 or 4.25 cap.
It's just that spread wasn't as attractive, right? So for right now, it's really attractive. But you also have to have the same honest discussion with yourself as a capital allocator. Are we selling homes that are much more centrally located to lean in on some growth areas or kind of new construction that might be kind of 30 minutes outside of town? So you have to be location appropriate with all your kind of analysis and how you think about growing your business. So that's why I think when we give a range, it's not, "Would we sell $3 billion of homes tomorrow at a 4 cap?" You kind of can't, right? You need to be smart about it. You need to be methodical about it. And you also got to think about portfolio optimization all along the way. We're solving for long-term returns.
I mean, we get stuck in these kind of quarterly cycles, to your point earlier. But at the end of the day, we want to invest it creatively. We want to do it in the right parts of the country. And we want to make sure that it's with the right partners, to Scott's point.
I guess how much of that product would you accept that's sort of a little bit further away from, call it, city center or whatever, however you're defining it?
Not a lot of it, truthfully. I mean, majority of what we've done so far, we just finished a community in Marietta, Georgia, with Lennar. We outpaced our rents by $300 a home from our initial underwrite. We're taking product in Corona, California, I think this quarter, is a community we've been working on for a couple of years. So those are very standardized communities for us. But would we lean in and maybe be a little more aggressive today in a market like Lakeland between Orlando and Tampa today? Maybe. Versus where we would have been, say, 10 years ago, where we wouldn't have done it. But that high 4 quarters is bringing everybody together. So I think that's how we think about it. Scott runs a really detailed internal investment committee process where our guys are bringing deals to the table all the time.
But we really, to Scott's point, are swimming way ahead upstream because we're under the hood with the builders years in advance of when these homes would deliver. So we're able to sort of kind of clean the funnel up.
Just one thing I would add to that is, again, on the information advantage that we have. Obviously, when we look at new site selection and where potentially we're going to invest into a new community site, we have access to the same 3, 5, and 10-mile census data that other people have. But we also have our own internal data. And so when we're looking at these sites, we know how our own homes are performing in that 3, 5, and 10-mile radius. And when we look at that data, and we can see with the turnover rate, we have the internal data on what the household income is and what the family composition mix is and what our new and renewal rate is in all of those homes. And so obviously, we're taking advantage of our internal business intelligence that we have in connection with these acquisitions.
That's obviously the information advantage that we hope we have.
And so maybe on that, I mean, what is that sort of informational, the real-time data telling you today about sort of the way certain markets might perform better or worse than what people are thinking so far?
I mean, I think the simple way to think about it is that the same live data we have, a new renewal rate, we're trying to take into account when we do our analysis. Again, these communities, some of them could be 6-9 months out. But again, just understanding the nature of the resident, who that resident is, and how they're performing in our portfolio today is obviously what we look at.
I'll give you an example. Scott was looking at a deal the other day. He'll look at our 3-mile radius and say, "We have 52 homes in that 3-mile radius." Then on that subset, Scott's going to dive in with Dan or our asset management lead and say, "How do those 52 homes operate over the last 24 months? Have we seen anything on the curve that suggests risk? Or are we seeing more potential upside? How much embedded Loss to Lease?" That's influencing our decision at underwrite. So as we look at these communities and these opportunities, to Scott's point, we're just using a lot of our own data to actually kind of sanity-check what we think census data or something else might suggest.
And I guess for everyone in the room, I mean, when we're sitting here two years from now and you're talking about technology that's impacting the industry at that time that's sort of in its infancy today, what do you think are some of the biggest things that we're going to be talking about in two years that people aren't paying as much attention to today?
Yeah. Yeah. Well, so I'll answer in a couple of ways. One, I think we talked about in our value-add services the bulk internet deal that we did. I think as you think about, we pushed in on that because we surveyed our residents. And that's what they were asking for. Everybody has a need for broadband. We're able to offer it at a really healthy price. So that's basic technology. But it's kind of plumbing that needs to be in the home. When you have that home set up that way, it allows us to do other things that we haven't been able to think about before. So we now have a video doorbell. We'll be able to do some things around being able to keep an eye on the assets and facial recognition and things like that that come down the line.
There's a lot of different ways you can go now that you have kind of a hot house, if you will. We can think about a number of things. We introduced the Smart Home technology years ago. It allowed us to change our leasing process. There's new kind of opportunities coming in that front around what AI, what machine learning will allow us to do to be smarter around how do we take in leads, which ones get sifted through by having chatbots and other conversations with folks to speed up our service to the resident. They get a better experience because they get immediate answers. But our people can go and figure out exactly where that lead may be. So it's things like that, that automation in the process that we're looking at first in kind of the leasing process.
I think it'll roll into overall property management in general and make it a much better experience for the resident long term.
Go ahead.
Yeah. I just wanted to ask a question about, as you think about recycling capital, how do you think about the crystallization of sort of profits versus scale as you think about?
Crystallization of profits?
You mean so you're selling them houses at a profit. But you are obviously moving against scale when you sell those houses.
I think one of the benefits of having such concentrated scale the way we do is that it gives us the ability to prune the portfolio, to asset manage on a house-by-house basis, and make decisions about where should capital appropriately be allocated. And we think we can do that without giving up the benefit of scale because we are so concentrated across our portfolio.
Just one thing I would add is that when we make a decision to sell a house, it's not in a vacuum. I mean, we have an internal asset management team that when a house comes up, the tenant is turning, we do an internal analysis on what is the age of the house, how much CapEx is required on the turn. We do a return on investment analysis on that house. And if we think that that house, based upon the current pricing and the market and what we think a return is on it, if we think it's a low-cap rate house and it's in a certain market where potentially we might have already targeted for a selective pruning, that's where we'll execute the trade. So it's not just an arbitrary decision on which houses to sell.
Maybe just a small one that I don't understand. I guess you say you have to sell the house when the house turns because presumably, you're not going to sell it to an investor. They're going to want a higher yield. But couldn't you just raise the rent sort of very high level for homes that you don't want to own long term? And then that would just force kind of maybe not the most tenant-friendly policy.
I was going to say that sounds pretty aggressive.
Nonetheless, you kind of control the rental rate. You control the ability to renew. So if you don't want to own the home, can't you just get out of it either way? You don't have to necessarily.
Well, I think, look, you have to have a balanced approach. I know this sounds like a very vanilla answer. But you really do. One, you have three major stakeholders in our company, right? We have residents, shareholders, and our associates. The resident experience, the resident engagement factor is really important to us. Now, to your point, we don't want to be stuck in any asset ever that isn't in its highest and best use in our terms from a capital allocation perspective. But all things being equal, and I think you just look at our last five years, I mean, the revenue growth that we're generating off these assets agnostically has been really, really good by and large. And on the margin, we've made some adjustments here. We've sold a few there. We've done this or that.
I think to your point, could you look to be more accelerated in your disposition programs? Sure. But we are also balancing for a 3, 5, and 10-year horizon as we think about our own balance sheet, the needs of the balance sheet. Some of these homes, for example, may help us in a concentration effort. And it may actually keep our margins higher by having that additional scale in an area. So to Scott's point, it's a very robust and kind of rigorous process. When we have a home that we think has potential long-term CapEx or OpEx risk, that's a much easier situation, right? We will actually go to the resident, say, "Hey, we are going to sell this home. When you're done leasing it, by the way, would you like to buy it?
It's up to you if you want to be the buyer." And so many times, we've done that over, I don't know, 150, 200 times, have sold homes to our residents who wanted to be there for a long period of time. And so there's a lot of ways that this programming can get sort of refined over a period of time. But the long story short, I guess what I'm trying to say is the cool thing about SFR is how disparate the assets and the locations are. The hard thing about SFR is how disparate and diverse the asset locations are. So it's not like one big building where we can make a buy-sell decision all the time. But it's a one-off asset sort of approach.
I think 95% of the time, we get it right when we want to get it right and the time frame we want to get it. Occasionally, you should stay in an asset longer. A family's got a situation, whatever it is. We work with the resident.
We have less than a minute. We have to do rapid fire. But just really quickly, how much time are you spending on any regulatory we see the headlines coming out of Congress or anything else? How much time are you actually spending on regulatory issues?
As a company, we have people that are dedicated to it. Yeah. Look, I spend time in D.C. talking to both sides of the aisle with my one public peer and also a few of our private peers, just educating and doing that. But it isn't anything big where it takes up all of our time or all of our headspace. But we definitely are focused on it more in the proactive way versus maybe a reactive way. And look, these things are going to come up from time to time. You just deal with them as they come up.
All right. Really rapid fire. Same story. NOI growth for single-family rentals overall next year in 2025?
There's only two companies. I'm just going to say mid-single digits.
Two companies. Will you have more or fewer of the same number of companies a year from now?
Depends on how you look at that question. But I would say same number.
What's the best real estate decision today? Buy, sell, build, develop, or buy back shares?
Sell your tough assets. Recycle and renew our stuff.
Thank you.
Thank you.