Transcript
Dean Wehrli:
Hey, welcome to the New Home Insights Podcast with your host Dean Wehrli. Today, we have something a little bit different. We’re going to start with more an issue before we get into a discussion with our guest about what he does and what his company does. Our guest today is Atticus LeBlanc, who I just found out the pronunciation of, he’s a little bit like Stephen Colbert, doesn’t … It’s L-E-B-L-A-N-C, I like the pronunciation.
Dean Wehrli:
He is the CEO of PadSplit. That’s a company that provides solutions and services for those looking to rent rooms or to rent a room. So, we’re going to start off though, with kind of a brief discussion about the housing crisis more generally, about the housing crunch, and then we’ll get later into what PadSplit is kind of doing about that. Before we get into that though, Atticus, let’s just talk a little bit about your background leading up to your founding of PadSplit.
Atticus LeBlanc:
Yeah, no, appreciate it, Dean and thank you for the opportunity. So, my background, I’ve been here in the Atlanta area, have been in the real estate segment for about 19 years now and spent the last 13 plus, minus years in housing and specifically in the affordable housing segment. So, have owned and managed 550 affordable homes here in the area, all the way down to Macon, but mostly in the Atlanta Metro, starting in 2008. So was there really before the crash was even known at the time, but I’ve been doing a lot of customer discovery and work a lot with more traditional affordable housing programs, as well as what we call NOAH, naturally occurring affordable housing, pretty much throughout my entire career.
Dean Wehrli:
Then bringing us up to PadSplit. You founded plats PadSplit about when?
Atticus LeBlanc:
2017. It was an output of an affordable housing ideas competition sponsored by Enterprise Community Partners. They were looking for ways to address the affordable housing shortage, which of course had just only become more and more acute, was still present when I started buying homes in 2008, but had gotten worse. By late 2016, they were looking for innovative ideas. This was one that I had seen in practice in terms of just the shared housing generally, shared housing space generally, and how it was working for a very low income segments of population and something that I just wrote a white paper on and said, “Hey, look, if you guys are serious about solving this, you should try to align incentives between the housing providers who are already in the business with those folks that ultimately need many, many more affordable options.”
Dean Wehrli:
And it is a pretty innovative idea, and we’ll get to that in just a couple of minutes. Let’s start though, with just a bit of overview on the housing crunch. I know you have a take on that. How big is this disconnect between the need for housing and the supply of housing? There’s a few estimates out there. I think it was Freddie Mac has about 3.8 million homes deficiency, 6.8 million from the NAR, but it depends on incomes, doesn’t it, and your focus on incomes?
Atticus LeBlanc:
Absolutely–
Dean Wehrli:
What is your take on the depth of that crisis?
Atticus LeBlanc:
Yeah, so the National Low Income Housing Council put that number in 2017 at seven and a half million, specifically for low-income Americans though. You get closer and closer to parity when you look at the average, but below a certain income threshold, there’s no question that there’s just a massive gap and it’s evident to anyone who drives around whatever metropolitan area they happen to be in, go visit an extended stay motel, just go look at the number of RVs or cars that people are ultimately seeking out of. The easiest way I think, to conceptualize it for anyone, is look at what the average rent is in your particular city and then multiply by three, because that is the monthly income that is going to be required for that individual to get past the application stage, just the first set of the application stage, in order to qualify for that unit.
Atticus LeBlanc:
So in Atlanta, where the average cost of a one bedroom apartment is $1,527, that’s going to require an annual income of $55,000 a year. When I came to town, give it 20 years ago, I was earning 30 grand and even today though, there are lots and lots of opportunities and jobs that pay far less than that. So it’s not difficult to extrapolate for anyone to look at, hey, what is the average rent and how many people make a lot less than the income necessary to qualify for that specific unit? It’s an enormous number.
Atticus LeBlanc:
We look at particularly for single person households, if you look at just renters that are one and two person households earning less than $35,000 a year, in the US that number is one third of the entire rental population, and it’s about 14 million people. So, it’s a really, really big number.
Dean Wehrli:
And that’s not even counting other hurdles like creditworthiness-
Atticus LeBlanc:
Exactly.
Dean Wehrli:
… or at least the quantitative perception of creditworthiness. So there’s an array of potential ways to address this. There’s those traditional, below market rate apartments, or subsidized apartment developments, there’s there’s co-living and co-housing, there’s accessory dwelling units, condo conversions. Let’s talk first about the BMRs, the below market rate rental units. Why do you argue that this traditional approach is inefficient, or at least it’s not up to meeting the full needs of the nation?
Atticus LeBlanc:
Well, the easiest way to look at it is what does it cost you to build that one bedroom apartment that would house that person today? And average across the country is north of $200,000. So if you know that you’re going to qualify someone who is earning less than 30 grand a year, which really means that that apartment needs to be less than 800 bucks a month, how on earth do you underwrite the construction of an apartment that’s going to cost you $200,000? Those numbers just don’t work.
Dean Wehrli:
$200,000 per door, right?
Atticus LeBlanc:
Per door, per door. Exactly. So, that’s a pretty easy calculation, certainly for any banker to do, that that’s not going to work. So you just need to get more creative about it. As you look at even just existing housing stock that is disappearing for any low income segment, there’s a real supply gap. Then of course you have that accessibility gap that you referenced earlier, and it’s not even just credit scores, not just income, it’s okay, well now to mitigate risk housing providers is going to require an upfront deposit of one month’s rent or two month’s rent, or sometimes more. Well, you know that this low-income population doesn’t have $400 to put together, get anywhere close to that required deposit.
Atticus LeBlanc:
Then as you mentioned, credit scores, then you’ve got to go furnish the apartment. Then you’ve got to get the deposits and have sufficient credit to turn on the utilities in that apartment. So, it just adds up until the point where it’s clear that no one can really ever access these. The way that we think about it is, looking at the supply that’s already existing is ultimately far more efficient. How do we capture some of that housing supply, although non-traditional, that already exists today?
Dean Wehrli:
So a big part of that is what is often called single room occupancy, or SROs, I’m not sure if want you use that term, I know it has a lot of negative connotations, fair or foul, but think of short-term room rentals, what is … Let’s start with the size of that. That seems almost impossible to estimate the potential size of the short-term rental market from existing stock. Do you have any sense of that at all?
Atticus LeBlanc:
Yeah, so today, existing stock, no. I mean, they’re effectively operating under the radar in every single jurisdiction. One of my favorite articles was from The New York Times. They did a feature a couple of years ago that looked at just the borough of Queens and specifically around immigrant housing. They found just loads and loads of folks who were living in these … substandard is maybe even too generous or word, but squalid conditions in subdivided basement apartments. They estimated there were tens of thousands of them just in the borough of Queens. But again, you look at what people are earning in those jobs, and then you look at what housing stock is available and there’s a massive gap. So they have to be going somewhere and where they are going inevitably is under the radar, whether that is sleeping in their cars, whether it is in our case here in Atlanta, a lot of folks sleeping in the airport lobby, it’s couch surfing with some friend or family member for some short period of time, living in an extended stay motel. But it’s incredibly difficult to quantify looking at the existing stock relative to the population that you know is not earning enough income to qualify for traditional options.
Dean Wehrli:
It’s funny you say that in New York, because they’re in New York, there’s this museum of tenement housing from a century plus ago, and it’s kind of looking back, “Look how squalid this was, look how awful this was.” They’ll be able to do that again in a hundred years for now, but it’ll just be a garage, or an RV, or something like that, to illustrate where folks were living.
Atticus LeBlanc:
Sure. Someone from our company pulled an ad off of Craigslist the other day for a tent, with an inflatable mattress in their backyard that they were renting for $125 a week and no access to the bathroom.
Dean Wehrli:
God. So, there’s no question, there’s a huge gap, especially again when you focus on means, on incomes, on low-income households out there in America. So let’s talk about PadSplit, let’s segue to that. Tell us about PadSplit and just give us the rundown on how you operate, what your model is, what your goals are.
Atticus LeBlanc:
Sure. Yeah well, I mean, the first thing is just the availability. I mean, as we referenced earlier, just what stock is available. I think two trends that are important to note. One is that if you look at the average size of a single family home, it’s more than tripled over the last 60 years. Meanwhile, we know that the boomer population is aging longer than prior generations and then you have millennial generation that’s one of the biggest in history that’s waiting longer to get married and form groups.
Atticus LeBlanc:
So, as a result, you have just a huge portion of the population that are these single person households, but you also have really big houses and no way to really capture that existing space. So I saw this as I was looking at different trends earlier in my career and thought, “Okay, well, there’s no way for a traditional housing provider to get any real incremental value out of a dining room, for instance, a formal dining room, but there’s also no reason that that formal dining room can’t be utilized for affordable housing for one individual.”
Atticus LeBlanc:
In that scenario, the housing provider earns net $500 to $600 plus per month from renting that bedroom and a low-income resident finds a suitable home that is certainly a lot better than any of the available alternatives for much less money. So what we decided to do was to try to create this model that provides tools and services for both housing providers and our members or our residents that makes affordable housing possible by also making it more profitable.
Atticus LeBlanc:
What that means is we are creating these shared housing opportunities where we can move strangers, for lack of a better word, in together in a way that is both safe and accountable for all parties involved and be a far superior option to anything that’s out there. But they live in a house just like anyone else. I mean, I’m sure most people have lived with roommates at some point in their lives. It seems like it’s particularly kosher for students or for seniors, but we don’t really think about it for the workforce at any age range in between those two. That’s ultimately what we enable for all of our customers.
Dean Wehrli:
Let’s start with that then, because my guess is, for the homeowner let’s say, with that excess room or excess space that they don’t need, how do you ensure the safety, the security of the renter?
Atticus LeBlanc:
Yes. Well, the first thing is just basic screening processes. So we are looking at income verification, identity verification, background checks on every member that comes in, and then we’re also verifying that the person who’s actually booking that room is the one who’s given the code to actually move into the property. They are also creating a profile so that if other people are there and they see, “Hey, this person created a profile, but that’s not the person who showed up.” We’re alerted to those types of things. But that’s really the first issue.
Atticus LeBlanc:
The bigger issue and this goes back to the age of tenement homes and SROs a hundred plus years ago, is fire safety. So what are we doing around fire safety, which in my mind is the biggest existential risk in a shared housing situation. So for us, we start with the basic HUD standards for any Housing Choice Voucher property, or most HUD buildings and any sort of HUD funding and then we add additional fire safety protection measures.
Atticus LeBlanc:
So, there are no deadbolts allowed on individual doors. There are two points of egress required from every bedroom. We place smoke detectors inside the individual bedrooms, as opposed to just outside in the common areas. Then we also offer, for probably 95% of our residences now, where they have specific stoves with hoods that have automatic fire suppression over the stove as well.
Atticus LeBlanc:
So all of those things just create an environment that is ultimately much safer than any other alternative. Arguably – I’ve been in multi-family housing for a long time as well – much safer than any of the other environments that have been managed traditionally.
Dean Wehrli:
For sure. So it sounds like you do a more extensive background check than Uber, for instance? I’m just kidding.
Atticus LeBlanc:
Well, I don’t know too much about the details of Uber’s background check, but it’s extensive.
Dean Wehrli:
I’m just messing with Uber. How do you find rooms? I mean, that’s your core thing. Obviously, you’re doing a lot more than just presenting a marketplace for short-term rentals. You go way beyond that, but that’s the key thing, that’s your product effectively? How do you find them? How do you search for them?
Atticus LeBlanc:
So to date, most of them have been organic and inbound traffic. My thesis early on was that … because I’d been a traditional real estate investor and affordable housing provider, but at the end of the day, every project is looking at the bottom line and how do you create this revenue stream that is sustainable over time?
Atticus LeBlanc:
So for me, it was pretty simple. If I could show investors how they could provide more affordable housing in a way that was actually more profitable than whatever their other alternatives happened to be, then they would do it. That has absolutely proven to be true. Even if you look at the trailing 12 months over 2020, which was certainly a very difficult time, I think, for anybody in the housing space, but certainly you would anticipate the same for a shared housing provider. We still increased the NOI of our owners 129% across the board. That was with the good, the bad and the ugly, all included. So those folks have just continued to show up and yeah, they’re excited to both do well and do good simultaneously.
Dean Wehrli:
How do you differ, and tell me if this is an unfair question, or it bugs the hell out of you, but how do you differ from an Airbnb? I’ve seen that comparison in some of the media. How are you different?
Atticus LeBlanc:
Yeah, so extremely different is the short answer. I mean, Airbnb and their entire marketplace was designed around short-term stays and a transactional relationship. We, in no way, have a short-term transactional relationship with customers on either side of the marketplace. We are a marketplace and we are digital, so that’s probably how we are similar. We both are involved in residential space, but that’s where the similarities essentially end. But for us, yeah, it’s the long-term resident management piece of that.
Atticus LeBlanc:
So there are three services that we provide for hosts or for those housing providers. One is the lead generation and finding, sourcing, qualifying, screening, and ultimately getting people to book those rooms, specifically for folks that are earning less than $40,000 a year. There is no single, consolidated source of lead generation for that client today, just doesn’t exist. So there’s a huge value add just in providing that service.
Atticus LeBlanc:
The other parts though, are one, the payment processing and collections mechanisms. So, in order to take this population where our median income is $22,000 a year, and the median incoming credit score is 461, we’re still able to derive payments and collections rates effectively north of 95%. The way that that works is because we’re recording this on a Tuesday, I know that today is Tuesday and I have no idea what day of the week, September 1st falls on. I would bet that very few of your listeners do either, unless we happen to be broadcasting on that date. So, rather than expect a population that we know is living paycheck to paycheck, that doesn’t have any sufficient savings, budgeting their entire lifestyle around that arbitrary 1st of the month, we say, “You know what, we’re going to bill every Friday, or Tuesday,” or whatever that particular resident finds convenient.
Atticus LeBlanc:
If they happen to get paid every second Thursday, that’s fine too. But it also means that we’re processing in that individual house that has, call it six rooms, 25 plus payments a month. So, owners don’t have the capacity to do that. Then the third piece is just building the accountability, the rating systems, where residents have the ability to give call outs and shout outs to each other and rate their landlords as well. Of course, we’re tracking all of the maintenance response times and those types of things as well.
Dean Wehrli:
Okay, okay. How long do most of your renters rent for?
Atticus LeBlanc:
On average, we’re at 10.2 months for total tenure. With that said, I started in the shared housing space experimenting in 2009. I still have the same woman who lives in the same room from 2009. We know that of all of the units that we have right now, between 15% and 25% of any particular group will basically just stay forever because this is their long-term permanent option. It’s the best that they’ll be able to find for their income and they simply don’t qualify to get a place of their own.
Dean Wehrli:
I can see how you’re different from co-living, which is a little more institutional, but it seems fairly … do you consider yourself a variant on co-housing?
Atticus LeBlanc:
It’s not dissimilar, the easiest way I can think about it is for folks that are familiar with the Housing Choice Voucher Program, we’re basically the private equivalent of the Housing Choice Voucher Program, where we have this intermediary relationship between the resident and the housing provider, where we are setting base level standards that the housing provider has to meet. Then we’re setting guidelines and requirements for the resident as well. It just happens to be much more open and we’re not using public funding, so we don’t have the cap on the number of vouchers that we can provide.
Dean Wehrli:
Do you think PadSplit actually potentially increases the supply of low cost housing by bringing folks into the room rental world that maybe otherwise wouldn’t be because you make it easy and you enhance the process?
Atticus LeBlanc:
No question. No question, yeah. I mean, as I look at … We got started here in Atlanta, we’ve created over 1,800 affordable units and again, median income, $22,000 a year. We know that 40% of our population has experienced functional homelessness at some point in the last few years. So, there’s no question and we hear anecdotally all the time, people who were renting in an extended stay motel for $1,300 to $1,500 a month that they absolutely could not afford, they were living in their cars. These are not from people that … When you think of a homeless person standing on the side of the street, you don’t think of the security guard at your local hospital, or the cashier at your grocery store.
Atticus LeBlanc:
That’s ultimately who we’re talking about here, are the frontline workers in every sense of the word, who just don’t have access. But yeah, I mean, how many formal dining rooms in the United States are being used right now for housing? Virtually none. So, the question for us is how do we increase supply? And it’s you take advantage of those existing inefficient and otherwise wasted spaces, and that’s ultimately where you create that new supply. Then even in some cases where we’re building new construction, or our hosts are, that they can ultimately build those homes much more efficiently from a square footage basis than would otherwise be practical.
Dean Wehrli:
 You’re entirely private and you’re not subsidized, but do you work with governmental institutions?
Atticus LeBlanc:
Of course, yeah, yeah absolutely. Actually HUD announced earlier this year, guidelines around using Housing Choice Vouchers for shared housing, which we were pretty excited about. Now, that’ll still be up to those, those local PHAs, but yeah, we work with a number of nonprofits. We worked with the continuum of care units for different cities around the country and specifically here in Atlanta. But yeah, there’s a huge support system that is important here, that we tap into readily.
Dean Wehrli:
What are the hurdles for you? My guess is it’d be a combination of maybe nimbyism and also the governmental or zoning kind of restrictions. Is that correct, more or less?
Atticus LeBlanc:
Unquestionably, yeah and those two go hand in hand. I mean, the regulations are largely in existence because of some sort of discriminatory practice and/or nimbyism, and that’s why they stick around. In the same way that I talked about aligning incentives between the people who need housing with the housing providers, what are the incentives of the existing property owners in single family neighborhoods to allow affordable housing in their neighborhood? Unless they have some sort of moral compass obligation, there is no financial incentive for them to increase the supply.
Atticus LeBlanc:
I mean, everybody knows the law of supply and demand and the less housing there is, the higher likelihood that your value is going to go up. So you just oppose every project out there, and that’s largely what we’ve seen play out in neighborhoods around the country. So, I think there’s no question that those laws that limit the number of people, unrelated people that can live together, those laws are certainly discriminatory. I mean, how can you possibly say that an unlimited number of family members can live in this house, but no more than two unrelated individuals? That just doesn’t make any sense. I mean, the Golden Girls would be prohibited in a huge percentage of the neighborhoods around the country.
Dean Wehrli:
Well, there are other reasons for prohibiting the Golden Girls but we won’t get into that.
Atticus LeBlanc:
Well, Blanche was a wild child.
Dean Wehrli:
It’s funny. Okay, this is a stupid and anecdotal, I know, but there is a co-housing home three houses down from us. Probably the most well-behaved, quietest house on the block easily, honestly.
Atticus LeBlanc:
Yeah, I mean, not anecdotal, candidly. I mean, a lot of people think, “Oh well, you’re moving strangers in together.” Or, “There are more people in that home.” Both of those things are not necessarily true, for the record, but what we’ve seen and I mean, I’ve been tracking this now for going on 13 years and the wear and tear is lower in shared homes than it is when you rent to one person or one family.
Atticus LeBlanc:
I’m not exactly sure why that is, but my suspicion is, look, I’m not a clean person by any stretch of imagination. My wife would certainly attest to that, but I can tell you this, when I go visit my in-laws, I tend to be pretty tidy. We see largely the same types of behaviors play out in these homes as well, where people stick to their rooms, by and large. They tend to be much more conscientious of common areas than they may be otherwise if they had controlled that entire space. I tell you what, if they’re not, I hear about it. Those are the types of calls that we deal with, that housing providers never want to get are, “Hey, Dean stole my cookies or made a mess in the kitchen,” that comes to us. That’s what we deal with, but I would never get that call.
Atticus LeBlanc:
I would never know that the kitchen was a mess if I were renting that entire house or that entire apartment to one person. I don’t find out that the house is a mess or that the kitchen is nasty until they move out later. Then I have to go re-renovate that entire unit, or re-renovate the kitchen, whereas in these cases, you very, very rarely have to do that.
Dean Wehrli:
I had a roommate once who would never clean out the saucepan after he made SpaghettiOs. If I had someone to call, believe me, I would have, it was like stone. Delicious stone, but it’s nasty. So let’s talk about price for a second. I mean, you’re very affordable. What are the typical price points roughly? Let’s say in Atlanta, I know you’re in other markets, we’ll get to that in a second, but in Atlanta, what are the price points.
Atticus LeBlanc:
Sure. Well, I mean, shared housing can and should be the lowest priced option available in any given market, regardless of where you are. In Atlanta, our rates are as low as $109 a week, but on average, you’re talking about $635, $640, but that’s also inclusive of all furnishings, utilities, wifi, laundry. We even include credit reporting and access to telemedicine in our fee as well. So, it is definitely a holistic view of affordability.
Dean Wehrli:
Real quick, Atticus, I think you switched from weeks to months though, so $640 a month is the …
Atticus LeBlanc:
Sorry, sorry. Yeah, that’s correct. Yeah, $640 per month. So $109 per week, but average is about $640 per month. So, call it $500 to $800, give or take, depending on if you have a private bathroom or a large master suite, versus a small room with a shared bath.
Dean Wehrli:
Have you ever looked at it in terms of what’s the norm in say, studio apartments in the same area, and you’re-
Atticus LeBlanc:
Oh yeah.
Dean Wehrli:
… I’m making this up half of that, or something?
Atticus LeBlanc:
So we’re 42% of the cost of a one-bedroom apartment.
Dean Wehrli:
Wow.
Atticus LeBlanc:
But the one bedroom apartment is rent only. I mean, even if you look at extended stay motels, 50% of the cost of an extended stay hotel, but we are all-inclusive.
Dean Wehrli:
Do you have mints? No mints though, okay. Well …
Atticus LeBlanc:
No, we do not have … No mints, no mints, sorry about that.
Dean Wehrli:
You got it-
Atticus LeBlanc:
We’ll work on that, work on that, yeah. Customer experience.
Dean Wehrli:
Describe your users, demographically, who are your typical tenants?
Atticus LeBlanc:
Sure, yeah. If you’ve ever gone through TSA at any airport, anywhere, the folks that are working for TSA, the teacher at your child’s school, the paramedic who shows up when there’s an emergency, the waitress at your favorite diner, everyone working in the kitchen at every restaurant everywhere, the Amazon delivery driver, the Uber, Lyft driver. I mean, it goes on and on. I mean, you look at the top 20 occupations in the United States and 11 out of the 20 don’t pay enough to afford traditional housing options. So, every single one of those.
Dean Wehrli:
Wow. Yeah, it is counter to, I think probably, I’m guessing, the perception of most folks out there, isn’t it?
Atticus LeBlanc:
Yeah, no, absolutely. I mean, it was shocking to me, and me even being in the housing business early on, when I realized that you could absolutely be working full-time, often two jobs and still not be able to qualify for traditional housing, or a standard apartment. I think the general population in the US today doesn’t really realize that, that the people that they interact with every day and that they rely on to serve their communities in some capacity are likely struggling with homelessness in a lot of cases.
Dean Wehrli:
You’re active in Atlanta and I believe also Houston and New Orleans.
Atticus LeBlanc:
That’s correct.
Dean Wehrli:
Are you assessing other markets for potential expansion?
Atticus LeBlanc:
Yeah. So, we have units under development right now in nine markets, but we’re active today, just outside Richmond, in New Orleans, and Houston, and Tampa. Then obviously in Atlanta, also have some stuff under development in the Indianapolis area, in Dallas Fort Worth, where we should be live shortly, Jacksonville, Florida, but largely Eastern US. Then we’ve had a pilot under development for a long time now in New York City, that was done in conjunction with the New York city government and a nonprofit there. But yeah, trying to expand as much as we can.
Dean Wehrli:
Do you concentrate in high rent areas, or is it low income areas, or is it really an interaction of those two factors?
Atticus LeBlanc:
It’s across the board. I mean, there is a gap just about everywhere and when I started PadSplit, my assumption, incorrectly, was that we would need to be focused on urban areas with access to public transportation. As it turns out, and we’ve had some housing providers that have explored all sorts of different areas, even well into the exurbs and rural jurisdictions, where the demand is just as high, if not more so in some cases. So, there’s a gap just about everywhere that you can think of, where you have these workers and you just don’t have that supply of housing, but that’s true in a tremendous number of cases.
Dean Wehrli:
That’s a good segue actually, because I was going to mention that National Low Income Housing Coalition study you referenced with a deficiency in seven and a half million units for folks with very low incomes. They have a map on that report and it showed state by state kind of an idea of where the greatest deficiencies are. I was surprised to see … You expect California to be on there, New York was up above, but there was also a lot of these semi-rural Western states, or Southern states like Texas and Florida. You think of those areas as relatively affordable, but there’s still a crying need out there as well. So it’s everywhere, isn’t it?
Atticus LeBlanc:
Sure, yeah. Well, I think that was the same report that showed … There was one done more recently that that showed, hey, you needed to make $20 an hour in order to afford a … I think that was the most affordable apartment in any given area or the affordable average per state. You think about, okay, well, we’re having this big discussion nationally about raising minimum wage to 15 bucks an hour, in Georgia we’re still at the federal minimum $7.35, and you realize, oh, wait a second, there’s no chance at someone trying to access an apartment without sharing it with other folks.
Dean Wehrli:
Yeah, yes, yeah. Let’s end with market size or maybe to use a stupid business buzzword, market penetration, which is to say, we don’t know how large this room rental sector is. We know it’s huge. I mean, I have to assume that your penetration of that market is tiny. A lot of people don’t realize that single family rentals, the big institutional players actually have a very small … a single digit market share of that. So, you’re kind of more institutional share of room rentals must be, what? I mean, infinitesimal?
Atticus LeBlanc:
Oh yeah. I mean, we’re active right now in just a hair under 2,000 bedrooms and we’re in a very small handful of markets, with our greatest concentration in one. As you look at pipeline units, we’re call it 4,500 to 5,000 of units that are under development, but it’s absolutely a drop in the bucket relative to the total. I mean, if you look at again, the people that you know won’t qualify for any other option. So, one in two person households that earn less than 35 grand a year, it’s 14 million people. So, even at $650 per month, that’s a hundred billion dollars a year just for that population, that don’t have access. So, it’s an absolutely massive market.
Atticus LeBlanc:
I mean, one of the reasons why, even though I was a more traditional real estate construction person in terms of my background, I felt like this had to exist as a technology company because Invitation Homes has a lot of houses, they have 80,000 homes. Well, 80,000 homes relative to 14 million people is nothing. So ultimately, what we’re trying to do is to enable this for anyone anywhere, that has the wherewithal and the capacity to take the space that they have and create affordable housing, and empower them with the tools and services to go do that so that they can then go provide opportunities for these folks who ultimately are just looking for a shot. I mean, they’re not looking for anybody’s pity, they just want a shot and a level playing field in some respect. I do this because I get really excited about providing those opportunities wherever we can.
Dean Wehrli:
It’s almost bittersweet that there is this huge need. You have a long runway ahead of you to expand your business, but it’s a little bit sad that that is such a long a runway, isn’t it?
Atticus LeBlanc:
Oh yeah, no doubt. No doubt. I mean, it’s shorter than it would be otherwise, though. I mean, if you look at the low-income housing tax credit program, it would take you 70 years to meet the need at least. That’s just today’s need, forget about growing population. So, hopefully we can do it in 10, but yeah, it’s a long way to go, for sure.
Dean Wehrli:
Well, I like your attitude and I like that glass half full look at it, is better than the alternative. I’m glad you’re doing what you’re doing, Atticus.
Atticus LeBlanc:
I appreciate it, Dean.
Dean Wehrli:
Well, I appreciate you for coming on the show. We had Atticus LeBlanc from the CEO of PadSplit here on the New Home Insights Podcast. Again, Atticus, thank you so much.
Atticus LeBlanc:
Great. Thank you so much for the opportunity, Dean. Really appreciate it.
Dean Wehrli:
That’s it for now. So until next time, I’m Dean Wehrli and this has been the New Home Insights Podcast. Thanks for listening.
