The first national survey of rental property owners and managers, sponsored by HUD and conducted by the U.S. Bureau of the Census, is near completion. Acquiring knowledge about the owners and managers of the private rental stock is essential as Federal low-income housing policies become more dependent on the private sector for the provision of affordable rental housing. First, these new policies, using tenant-based subsidies (such as vouchers and certificates), require that the tenant receiving Federal assistance find housing in the private market, with private property owners and managers playing a crucial role. Second, Federal housing assistance is only provided to the most needy, and then only to a limited number; housing assistance is not an entitlement. As a result lower income families, many of whom are eligible for Federal assistance, must depend on the private-sector provision of affordable housing. The success of these tenant-based programs and the availability of affordable housing to low-income, unassisted families require more knowledge of the motivations, goals, policies, operating conditions, ownership forms, maintenance policies, revenue needs, conflict resolution methods, and tenant selection processes of the private rental sector.

Survey Design and Current Status

A sample of owners and managers was drawn from a list of all housing units in the United States to allow inferences about the entire rental stock. This selection procedure leads to valid inferences about "the owner of the typical rental unit," not "the typical owner."

Two questionnaires were used: one for owners and managers of single-family properties; the second for owners of multifamily (2+-unit) properties. HUD and the U.S. Census Bureau developed these questionnaires utilizing information from several sources: a panel of housing research experts, a group of housing-related associations, focus groups of property owners and managers, and cognitive laboratory testing.
The questionnaires were first mailed to sampled owners and managers. Followup of those owners who did not return their questionnaires was conducted by telephone and then by personal visits for a portion of the remaining nonrespondents. Of the original sample of 16,400, approximately 3,000 properties were out of scope, meaning they were owner-occupied, public or military housing, vacant and for sale, second or vacation units, or vacant and not available for rent or sale. As the field period continued, concern grew that not enough time or money remained to follow up all incomplete cases using personal interviews. Therefore, about 3,000 cases were subsampled out. Of the remaining cases, data collection was completed with owners and managers of more than 8,000 cases, leaving about 2,000 cases where the owner and manager refused to be interviewed or could not be located.

The questionnaires covered a wide range of topics: acquisition of the property, characteristics of the property, financing, maintenance and capital spending plans, expenses and income, nature and form of ownership, management strategy, tenant relations, and governmental relations. Since specific units were sampled, owners and managers were asked about the specific unit, the property containing the specific unit, and all properties held or managed by responding owners and managers.

Data collection is complete, questionnaire data have been edited and cleaned, sample weights are currently being refined, and tabulations are being prepared. This article presents some interesting, though preliminary, results using proportions estimated from data for multifamily properties. These early results should be viewed with caution since survey staff have not yet assessed the extent to which the lack of information from nonrespondents affects the results, nor have they calculated statistical margins of error. The next issue of U.S. Housing Market Conditions will contain further discussion of the results. In the future, HUD and the U.S. Census Bureau will produce a complete set of weighted tabulations for both single-family and multifamily properties, conduct and publish additional analyses, estimate sampling errors, and provide copies of the database using alternative media (expected in early 1997). Following are some of the survey questions and results tabulated thus far.

Who are the owners of multifamily rental housing?

The majority of housing units¹ (55 percent) are located in properties owned by individual investors, including joint ownership by two or more individuals. Limited partnerships are the second most common form of ownership (15 percent), with general partnerships (8 percent) and real estate corporations (7 percent) coming in third and fourth, respectively. The type of ownership is quite different for small properties compared with larger ones: Individual investors are overwhelmingly owners of small properties, while limited partnerships, general partnerships, and real estate corporations own more properties with 50 or more units.
While nonreporting was rather high for personal and demographic characteristics of individual investors and partnerships, the majority of individually owned rental units were reported to have two owners (41 percent), with single-owner properties (37 percent) and properties with three or more owners (21 percent) accounting for somewhat less. About 70 percent of rental units are owned by holders of other properties. Owners of rental units are predominately male (81 percent), overwhelmingly white (89 percent), and have a median age slightly above 55 years old.

How, why, and when were properties acquired?

Purchasing was by far the most common method of property acquisition for rental units (84 percent). The second most common response was "through some other manner" (8 percent), and the remaining categories were checked infrequently: inheritance or gift (3 percent), foreclosure or assignment (3 percent), and tax-free exchange (1 percent). The most frequently reported main reason for acquiring multifamily rental property was to generate income (38 percent), followed by receiving long-term capital gains (16 percent), providing affordable housing (11 percent), maintaining a residence for self and family (10 percent, with 90 percent of these owning properties with four or fewer units), and providing retirement security (7 percent). The majority of rental units have been held by their owners for more than 10 years, with the median date of acquisition being about 1985.

How do owners and managers feel about their properties?

Owners and managers generally hold positive views of their properties. Most rental units have owners and managers who responded that, over the past year, their properties were more profitable or about the same as similar properties (12 and 49 percent, respectively), while only 13 percent believed that their properties were generating less income. Twenty-seven percent of rental units were held by owners and managers who were not sure or did not know how the incomes from their properties compared with others'. Most rental units were owned by owners and managers who thought that their properties were increasing or maintaining their values (26 and 42 percent, respectively) over a year ago, with only 13 percent responding that values had decreased in the past year. About one in five rentals had owners and managers who were not sure or did not know how the value of their properties had changed in the past year.

Owners of one out of two multifamily properties (49 percent) stated that they intended to hold onto their properties for 5 or more years, while 38 percent "did not know." When asked the main reason for continuing to own the property, more than one-third (37 percent) of rental units had owners and managers who replied that it was income. Only five other categories were checked by more than 5 percent of the rental units with responding owners and managers: long-term capital gains (12 percent), affordable housing provision (10 percent), retirement security (9 percent), and residence for self or family (8 percent, with 86 percent of these owning properties with four or fewer units).

Property ownership is generally profitable: Owners and managers most often answered that their properties earned a profit last year (44 percent of units), but losses occurred about one-fifth of the time (19 percent) and a break-even situation resulted about one-tenth of the time. (However, more than one-fourth of rental units had respondents who did not know or were not sure whether the rental property earned a profit.) Finally, rental units more often (49 percent) than not (23 percent) were held by owners who would acquire the same property again, with only about one-fourth (28 percent) owned by respondents saying they were not sure or did not know if they would purchase the property again.

In almost all rental units, owners and managers handled all maintenance immediately and practiced preventive maintenance (88 percent), while very few postponed most maintenance but handled major problems as quickly as possible (4 percent). Maintenance plans for the next 3 years are nearly identical to current maintenance plans, with 90 percent of owners handling all maintenance immediately and practicing preventive maintenance.

How do owners and managers describe the tenants they serve?

Tenant incomes were most often characterized by owners and managers as low to middle income. The two most common responses were mostly middle income (31 percent) and mostly low income (31 percent), followed by somewhat diverse, with low- and middle-income tenants (21 percent); somewhat diverse, with middle- and upper-income residents (9 percent); very diverse (5 percent); and mostly upper income (3 percent). Most rental units (78 percent) had tenant income mixes that had not changed in the last 2 years, while those with changed tenant incomes most often had more middle-income tenants (44 percent).

Tenants generally pay their rents on time: Owners and managers of about one-third of rental units reported no delinquencies, another one-third reported delinquency rates of between 1 and 9 percent, and about one-tenth related delinquency rates of 25 percent or more. For rental units with delinquencies, most owners were experiencing minor cash-flow problems (70 percent) with their properties, with about 1 in 5 having moderate problems and about 1 in 10 having serious cash-flow problems.

Owners and managers of four out of five rental units reported that tenants never or rarely engage in undesirable behavior. Fewer than 1 in 25 rental units have tenants exhibiting frequent undesirable behavior.

Over the past 2 years, owners and managers of about half of the rental units have had to take tenants to court, with about 1 in 5 going to court more than 5 times. (Ninety-four percent of these owners and managers have large properties containing 20 or more units.) On the other hand, owners and managers of about 1 in 10 rental units report being taken to court by tenants. Eviction procedures were reported to have been initiated quite often (60 percent) over the past 2 years, with larger property owners (50+-unit properties) accounting for almost two-thirds of these cases.

What do owners and managers think of government programs, regulations, and restrictions? When asked whether their properties benefitted from six different government programs, owners and managers of most rental units (77 percent) said that their properties benefitted from none of the programs listed. Of the programs reported as assisting the properties, governmental rental subsidies (such as the Federal Government's Section 8 payments) were noted most often (18 percent), government-sponsored below-market interest-rate loans were the second most frequently reported (6 percent), and property-tax relief was the third most popular program (3 percent). The remaining three programs -- government capital grants, Federal income-tax credits, and accelerated depreciation -- were reported rarely (1 percent).

Owners and managers of more than one-third of rental units reported having current and previous tenants who were Section 8 recipients. Owners and managers of about half of the rental units stated that they would accept tenants who were Section 8 voucher or certificate recipients. The reasons for not accepting Section 8 recipients included: too many regulations (33 percent), too much paperwork and time involved (also 33 percent), potential problems associated with program recipients (29 percent), and rents exceeding the Fair Market Rent (24 percent). (Multiple responses were allowed.)

Owners and managers reported little difficulty operating their rental properties because of government regulations or restrictions. It should be noted that these regulations and restrictions are likely to impact most heavily during the development of rental properties, so low levels of difficulties during later lifecycle stages would be expected. In fact, with only two exceptions, owners and managers of fewer than 1 in 20 rental units responded that a regulation or restriction caused a difficulty. The two exceptions were parking restrictions (11 percent) and local property taxes (21 percent).

Future Directions for Research

The results discussed above, in addition to being preliminary and subject to change, represent simple (marginal) tabulations of the data. What is presented barely taps the information in the database. It will be interesting to see how responses differ between properties affordable to lower income families and more expensive properties. For example: Do maintenance policies differ? Do owners supplying affordable housing to lower income families make capital improvements less frequently? Do they offer fewer amenities? Do tenant selection, incidences of conflict, and eviction handling differ? Are owners of the affordable stock more likely to be individual investors or nonprofits? What is the likely impact of policies followed by nonprofits on other suppliers of affordable housing?

The role of owners of single-family rental properties will also be investigated. For instance: Do single-family property owners differ from owners of multifamily properties? Are there differences between owning and managing affordable and more expensive single-family rental units? How important is the single-family rental stock in providing accessibility for tenant-based subsidies? For larger families? For owners' retirement plans? Do maintenance and improvement policies differ depending on the expected holding periods or recent profitability?

HUD and the U.S. Census Bureau plan to explore some of these issues and hope that other researchers in the housing community will also utilize this rich data resource.