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The More the Merrier: Altisource Adds a Few More Seats to the Family Dining Table

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Firm Acquires RentRange and Investability as rental data becomes a market, moneymaker

By Kerri Panchuk

Editor's note: This select print feature originally appeared in the December 2015 issue of DS News.

If you are a firm like Altisource Portfolio Solutions, the year 2015 ushered in a new era—one in which the mortgage, financial, and technology services firm could no longer deny that strategic mergers, new data, and a growing platform supporting the growing single-family investment segment is what’s needed to play in the year 2016 and beyond.

Altisource, which prides itself on strategic and sensible growth, wasted no time, announcing earlier this year that it would enhance its offerings in the home rental market with the acquisition of RentRange and Investability.

So what are these two new assets and why do they fit with Altisource hand to glove? For starters, at a time when single-family rental investing is all the rage, RentRange offers market level rental data, analytics and solutions that evaluate rents for single-and multi-family properties. RentRange has already made a name for itself as an aid to investors, property managers, lenders and appraisers.

Add in a little dose of Investability—a firm that offers investors data such as cash flow, cap rate, net yield on rents and market value data on properties—and Altisource has now constructed what can only be called a one-stop shop for real estate solutions, while making itself a type of behemoth in the quality real estate data segment.

Just ask Wally Charnoff, CEO of RentRange, what the strategic merger means, and it becomes clear that the players in the data space are constantly charged with finding new ways to cater to the residential real estate investor.

“The demand for data is significant,” says Charnoff. “The data was a big motivation,” he says of the recent Altisource transaction. “Prior to the type of data that RentRange had, it was tough to evaluate the rental health of a market and to look at different markets across the country and get accurate rates and turn rates..” he added. But all of that has changed, he says, noting that the combination of RentRange’s Intel on markets and rentals and Investability’s investor-inspired data creates a nice synergy as single-family investors up their play in this space.

Charnoff says Investability and RentRange under one roof provides the investor with everything he or she needs to safely invest outside their geographic area and to make informed opinions. “You have to have data available on what geographical areas are good to move into,” he says. “It was tougher to evaluate opportunities across the country.”

“The demand for data is significant.”

Walter Charnoff, CEO, RentRange

In fact, Charnoff said before you had to look at the inventory and run analytics on each property. Now, with the combination of RentRange data and the Investability search engine and data on cash flow and vacancies it can all be done at once, cutting back on time and easing investors worries.

Another group is hungry for this data, Charnoff says. And that group is Wall Street. As single-family rentals become more geographically diverse and spread out, attracting financial minds who manage these from a centralized location in another city, the data is what is driving their decisions on property more and more.

And there is no sign that anyone should expect single-family rentals to die down anytime soon. In fact, statistics show it’s a robust market segment that is more likely braced for greater growth.  As Fannie Mae noted back as early as 2012, the U.S. Census Bureau’s American Community Survey noted that from 2005 to 2010 “single-family rental units as a share of the renter-occupied stock grew from 33.5 percent.”

The synergy between the two data firms and Altisource only expands upon what has been a company focused on providing the investment and real estate community with all of their needs under one roof. Residential Investor One is managed by a subsidiary of Altisource and led by CEO Thomas J. O’Sullivan.

“Residential Investor One is focused on real estate investors, predominately those in residential real estate,” O’Sullivan told DS News. His firm provides provides access to preferred pricing across the investment life cycle from sourcing to due diligence, acquisition, financing, rehabbing, renting, managing and finally selling the property. The company, much like the new firms joining Altisource, has been focused on technology and how it can be leveraged to help investors throughout the process.

Before this transaction, O’Sullivan was already working with Charnoff, CEO of RentRange, making the addition of the firm under the Altisource parent company a natural fit and boon for his firm and clients.

“We already had them on as a vendor which is pretty ironic,” O’Sullivan noted. “By bringing them on, it rounds it out.”

O’Sullivan credits the Investability addition as well since it gives potential end-users more access to data and analytics.

“Technology is important. The acquisition of Investability is a big part of that.”

Tom O'Sullivan, CEO, Residential Investor One

“There is value to having all of these capabilities in one company,” he added, “and that is what Altisource is looking to do … to become a single source for the real estate market. With these acquisitions, they are there in the real estate space as well, particularly in single-family rental. There is a need and drive for better analytics and technology.”

And that need has been inspired by the number of investors running books on single-family rental properties far away from local offices, as Wall Street funds continue to take stock in this space.

“As the Wall Street-type players came into this space, they brought a little of what they do,” O’Sullivan explained. “They brought a level of sophistication as to how they go about their business. There is a need to bring that level to the small and medium players that do not have access to the data and analytics that the larger companies are providing.”

When looking at how his own customers will benefit from having  Investability and RentRange under one roof, O’Sullivan is not shy about promoting these firms as a strategic partner that brings a little extra shine to Residential Investor One’s offerings for investors. The biggest beneficiaries will be smaller players who do not have access to the same data available at larger institutions with more funds and technology.

“A lot of the smaller and medium players in this market don’t really leverage technology to the degree they can to create efficiencies,” he said.

But with a tool like Investability, data can be dropped in, allowing investors to get a rehab calculation upfront, so they can have more precise estimates when formulating deals.

“Most of these properties have to do a significant rehab,” he says of the single-family rental segment. “Most of these players have to do some sort of upgrade to the property.”

With the in-house technology suite from Investability, the property can be sourced, with the carry costs and rehab costs formulated upfront, allowing investors to make a knowledgeable opinion about whether it is a quality property to purchase.

“Technology is important,” O’Sullivan asserted.  “The acquisition of Investability is a big part of that … they have all of that built out on the front end.”

The single-family rental side is clearly as strong as ever with HomeUnion, an online real estate investment management firm, recently putting out its own list of the top markets for single-family rental properties. As more of these lists surface, it is clear investors are primed and also hungry for data. If you are O’Sullivan this is where Altisource gets its next tailwind, with strong data firms steering investors the right way.

“RentRange and Investability help me quickly get the residential investor what they want, completing our business model and allowing us to provide the product and services across the entire investment life cycle.”

The investor at the same time gets a better resource to tape into and a greater chance to become profitable.

The true perk of having all these firms under the Altisource roof is the simplicity of obtaining complex data and solutions from one source.

“The ability to mine the data and provide insight to members, I think that will be a great benefit,” O’Sullivan noted when discussing how the deal helps the clients of Residential Investor One. “There are so many data points that we can get from those sources to help members identify the best places to invest.”

Both O’Sullivan and Charnoff move ahead with new tools and data sets to leverage as they continue to support various aspects of the real estate investment cycle. The one takeaway they both see from the deal is the value of synergy – or the ability to let talent and tools intersect for the benefit of all participants.

For Altisource this is the formula that works in the Wild West of single-family residential investing and real estate. And for them, they are riding on relatively steady plains so far.

About Author: Kerri Panchuk

kerri panchuk
Kerri Panchuk is an attorney and financial writer with more than a decade of experience covering real estate, default servicing, residential mortgage-backed securities, retail, macroeconomics, and commercial real estate. Panchuk graduated from the Southern Methodist University Dedman School of Law and texas Tech University, Panchuk previously served DSNews.com as online managing editor/producer and webcast anchor. In April, she rejoined the Fiver Star Institute as executive director of member groups, overseeing the development and growth of the National Appraisal Congress and Title and Closing Coalition. Panchuk is a member of the State Bar of Texas.
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