State of the Rental Industry
As the U.S. navigated a turbulent economy filled with high inflation and mortgage rates in 2022, the rental industry rode the waves well. The majority of independent landlords received 100% of the rent owed to them, and landlord-tenant relationships are trending well.
However, there’s conflict on the horizon as opposing views of rent control, economic fears, and climate concerns sound from every neighborhood – begging the question, how can we summarize everything accomplished this year, and what will next year hold?
Data Dip
On average, landlords rated their tenants as
Here at TurboTenant, we’ve been surveying our landlords and tenants alike to understand how the state of the economy and national discourse as a whole has impacted the rental industry. According to the Pew Research Center, most landlords are individuals who own just a few units with the number of individual investors sitting at 14.1 million – and the independent landlord, also known as a mom-and-pop landlord, was the main participant in our surveys. Over the second half of 2022, we sent a total of six surveys to our audience, garnering over 7,300 responses. Our findings for this year are summarized below.
2022 Wrap Up
This year brought plenty of turbulence for DIY landlords – but they largely came out ahead! Let’s dive into which predictions came true and how well the average rental property business is performing as we examine 2022.
Raising Rent
In February 2022, we asked landlords if they were planning to raise rent over the course of the year.
As of December 2022, we found that those who planned to raise rent did, yet those who were undecided opted to keep pricing the same.
According to our landlords, the leading factor that influenced their decision to raise rent was that the cost of running a property management business had increased.
How Much Did You Increase the Rent?
86.1% of landlords who increased rent raised it by less than 20%.
Portfolio Composition and Expansion
Common investing advice suggests diversifying one’s portfolio with smart, lasting investments when possible – and you’d be hard-pressed to find a smarter investment than rental real estate.
We asked our landlords to select all the relevant options from the list below to contextualize their current portfolios.
What Types of Real Estate Investments Do You Own Currently?
While single-family homes are the clear favorite, 2022’s buzz surrounding the climb (and light fall, as of November) of multifamily rent prices, leads us to believe there could be an uptick in this type of property acquisition in the years ahead.
Many landlords weren’t certain they would be adding to their portfolios in 2022, given the economic turbulence. But as the financial landscape evolved, their original trepidation subsided.
30.7% of landlords indicated that they planned to purchase property at the beginning of the year. By December, 42.6% said they had purchased one or more properties in 2022.
30.7% of landlords planned to purchase property this year
42.6% of landlords said they had purchased one or more properties in 2022
The difference between these figures suggests a combination of opportunity and grit led landlords to complete property purchases despite economic uncertainty.
The Landlord-Tenant Relationship
In the first half of 2022, landlords rated their tenants as 4.3/5. However, that score has since increased slightly – now, landlords rate their renters as 4.4/5 on average.
On the other hand, renters’ sentiments toward their landlord dropped by a few percentage points.
On average in the 2nd half of 2022, landlords rated their tenants as
In the first half of 2022, 63.3% of renters rated their current landlord as 5/5:
In the second half of the year, only 58.9% of renters rated their current landlord as 5/5.
Pro Tip: The landlord-tenant relationship will become even more important to your success in 2023! Learn how to make the most of it.
Financial Challenges
As increased inflation and mortgage rates dominated the news cycle, it seems renters were feeling the burn more than their landlords.
When asked to pick three words out of a list to describe their feelings toward the economy, renters’ top three choices were frustrated, scared, and angry.
Renters' feelings toward the economy
- Frustrated
- Scared
- Angry
On average, 74.9% of renters said the state of the economy impacted their day-to-day life, citing increased worries about finances, the cost of living, and having to choose between rent and food.
Some landlords’ daily lives were impacted by the economy, but others felt that the current climate offered opportunities. Their top three words to describe their reaction to the financial state of things were frustrated, optimistic, and calm.
Landlords' feelings toward the economy
- Frustrated
- Optimisitc
- Calm
It may be the eternal relevance of their investments that make landlords feel more optimistic about weathering the economy – people will always need somewhere safe to live, even during turbulent times.
To that end, the majority of renters paid their dues in full this year, and we expect that pattern to continue moving forward.
Percentage of Rent Paid Monthly on Average
- 100%: 50.7%
- 80-99%: 2.4%
- 60-79%: 5.3%
- 40-59%: 19.2%
- 20-39%: 17%
- 0-19%: 5.4%
However, nearly 20% of renters spend more than 50% of their monthly income on rent, which isn’t sustainable long term.
Percentage of Monthly Income Spent on Rent
- Less than 30%: 26.5%
- 30-50%: 55.0%
- More than 50%: 18.5%
Looking Ahead
What does the future hold for independent landlords and their tenants?
Property Acquisition and
Long-Term Plans
To begin, 50.2% of landlords plan to purchase property in 2023.
When asked about their long-term goals regarding their rental property investments, an average of 45.7% of landlords said they’ll just keep renting out units until they’re tired of property management.
50.2% of landlords plan to purchase property in 2023
Long-Term Real Estate Investment Portfolio Plans
- Just keep renting out units: 45.7%
- Diversify the portfolio: 18.7%
- Reach a certain portfolio size: 15.3%
- Make enough money: 12.9%
- Other: 7.5%
“Other” responses include building enough equity to buy more rental property, passing the rental property business to their children, and keeping their portfolio strong for estate planning purposes.
Rent Control
Rent control was discussed frequently, both by our landlords and the industry at large. There are several opinions about rent control, including among our audience.
Interestingly, the majority of landlords and tenants surveyed didn’t know enough about rent control programs to say whether they were in favor or opposed.
Landlords’ Support for Rent Control Programs
Renters’ Support for Rent Control Programs
The landlords and tenants familiar with this issue found themselves on opposing sides, with 35% of landlords opposing and 35.7% of renters supporting rent control programs.
Climate Change Concerns
As the world faces consequences from climate change, it’s no surprise that many renters are thinking about the environment, too.
60% of tenants said that they are worried about the environment.
The Distribution of Renter Sentiments Regarding Environmental Concerns
Despite their concerns, 56.6% of these renters would not be willing to pay more in rent for a more environmentally friendly unit. However, 43.4% of tenants were willing to pay higher rent.
When asked how much more they would pay for a more climate-friendly unit, 31.3% of respondents said they’d pay an extra $100 per month.
Renters Becoming Homeowners?
Given their economic fears, we asked tenants about their desire to own property. 77% responded that they want to own a home someday.
From there, we assessed their perceived likelihood of purchasing a property within the next two years.
What’s the Likelihood Renters Will Purchase Property Within 2 Years?
While 44.7% of tenants believe they’re likely to buy property within the next two years, their average savings tell a grim story.
How Much Money Do Renters Have in Savings on Average?
68.5% of renters have less than $5,000 in savings, which will make their quest for homeownership that much harder.
Respondent Demographics
Age
Gender
Race & Ethnicity
- Asian: 7.9%
- Black or African American: 9.7%
- Hispanic/Latine: 7.9%
- Indigenous/Alaska Native: 1.1%
- Native Hawaiian/Pacific Islander: 0.8%
- White: 59.4%
- Other/Prefer Not to Say: 12.1%
- Unknown: 1.1%
Education
Annual Household Income
The Number of Rental Units Owned
1-4
units
71.4% own 1-4 rental units
5-10
units
16.8% own 5-10 rental units
11-20
units
5.9% own 11-20 rental units
21+
units
5.9% own 21+ rental units
Area in Which Properties Are Located
Rental Environment
- Urban: 54.7%
- Suburban: 29%
- Rural 16.3%
Rental Income Makes Up What Percent of Total Income?
The Number of Years of Landlording Experience
Working Outside of Landlording
Industry Outside of Landlording
Renter Respondent Demographics
Age
Gender
Race & Ethnicity
- Asian: 4.4%
- Black or African American: 19.3%
- Hispanic/Latine: 11.1%
- Indigenous/Alaska Native: 2.1%
- Native Hawaiian/Pacific Islander: 1.1%
- White: 53.5%
- Other/Prefer Not to Say: 7.7%
- Unknown: 0.8%
Education
Household Income
Job Status
Job Industry
Rental Environment
- Urban: 54.7%
- Suburban: 29%
- Rural 16.3%
TurboTenant's Methodology
Throughout 2022, we regularly sent surveys to our active landlord and renter bases, receiving 11,370 completed responses (4,040 from the first half of the year, and 7,330 from the second half of the year). Survey topics covered rent payments, financial challenges, and sentiments surrounding the economy. Our surveys are conducted using Typeform. All data is for general analytical use only. Individual responses are confidential, and we do not share the identity publicly or with third parties. For access to the anonymized data or to discuss a collaboration, please email [email protected].