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Analysts try to get handle on costs during Silver Bay earnings call

  • Surprised at the bump in property maintenance to 29.5% of revenue from 23.5% in Q2 and just 19% forecast, KBW's Jade Rahmani asks for clarification. Management admits surprise at some costs, but reiterates its commitment to bring the ratio down, and asks for time to get more of the portfolio leased and the operation up and running at full speed.
  • In response to another question about management fees - which at the moment are charitably running at the whopping rate of more than 15% of revenue - management promises to dramatically bring that down in 2014. CEO David Miller notes the South Florida operation is bringing lots of costs, but not a lot of revenue as it ramps up.
  • Acquisitions - which slowed to about zero in Q3 - have started back up again in Q4, Miller tells Zelman's Dennis McGill.
  • Q3 earnings call transcript
  • Previous Q3 earnings coverage
  • SBY -1.8%
Comments (2)
  • Blah blah blah...punt down the road...when will they be able to achieve a meaningful dividend say of 4% ($0.60+ a year)??? NEVER. The instituional SFR rental model doesn't work.
    7 Nov 2013, 04:27 PM Reply Like
  • The institutional SFH rental model is flawed based on my experience with the 10 properties, all in one city, I acquired 2011-12. I use a property mgt company. After 6 months "stabilizing" my properties, I had 6 months of low costs and good returns. But after 1 year I have entered the next phase that is move out and eviction rehabs and my costs are high again and may remain that way going forward. Sounds like SBY is entering this next phase too and has also been surprised by the costs.

     

    I have concluded:
    SFH turnover is not lower than multi-residential.
    SFH has much higher yard and exterior maintenance costs per unit than multi-residential.
    A/C mtce costs higher (as every unit has one).
    SFH have more bodies, translates into more damage.
    Typical tenants are way harder on homes than homeowners or investors. Move out rehabs are as expensive as my foreclosed rehabs .
    Local Mom & Pop DIY operators have cost advantages over institutions or property managers - Can do drive bys, inspections I can't.

     

    8 Nov 2013, 02:05 AM Reply Like
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