Editor's note: This story originally appeared in the November edition of MReport.
We sat down with Jeffrey Tesch, CEO of RCN Capital, to discuss the impact of COVID-19 on the single-family rental investment market. Tesch is responsible for overseeing the operations of RCN Capital, including sales growth initiatives, underwriting review with compliance oversight, and leadership of senior-level strategic planning. After he joined the company in 2010 as Managing Director, Tesch led efforts to develop a national brand in private lending with the best practices and transparent products for a diverse customer base. Since RCN’s inception, Tesch has personally overseen over $1 billion in originations. His previous real estate experience was as an investor in both commercial and residential properties.
M: You spend your time speaking on the national stage at events like the Five Star Conference—why are events so important for what RCN Capital does?
Tesch: It’s really about communication. As a nationwide lender, RCN Capital values REO agents more than ever. They have the boots on the ground across the nation. RCN provides capital to people and companies who buy distressed assets, renovate them, and either sell them or hold them for rental income. Our ability to communicate with the REO agents across America right now, especially in these crazy times, is more valuable than ever.
M: Speaking of unprecedented times, what is the impact of COVID-19 on single-family rental investments?
Tesch: Going into 2020 we had the strongest January and February that we’ve ever had in the history of the company. I mean, truly amazing numbers for the winter and unprecedented demand for single-family rentals. Then when COVID-19 hit in March there was a pause for four to six weeks where every-one got their feet underneath them across the real estate sector. Not just lenders, but investors, homeowners, and portfolio managers as well. However, once we hit the end of April, it was clear that the demand for single-family housing, especially from the rental sector, was unabated. We were pleasantly surprised.
M: Do you think this demand will continue into 2021? What do you predict for the housing market in the year ahead?
Tesch: First off, let me say that I believe that Fannie, Freddie, and FHA in general has done a tremendous job in providing support—displaying the lessons learned from the housing crisis. This includes providing capital quickly to put a floor under the single-family housing market. What is going to dictate what happens in 2021 is how quickly single-family homeowners who have experienced distress in their own personal finances can get back to work. The GSEs’ plan of tacking missed payments onto the end of the loan is going to provide the support that I believe most homeowners need to be able to their footing so we don’t see the level of foreclosures that we 12 years ago.