What changed in this filing

/stocks — the workspaceLOADING

Item 1A. Risk Factors

2023-02-22 compared with 2022-02-22 · 195 added, 196 removed, 568 unchanged (41% of the section changed)

1 unchanged sentence

Additional risks not presently known to us or that we currently deem immaterial may also impair our business operations.

Moreover, many risk factors set forth in this Annual Report on Form 10-K have been heightened as a result of the impact of the COVID-19 pandemic.

Risks Related to Our Business and Industry

Our operating results are subject to general economic conditions and risks associated with our real estate assets.

Our operating results are subject to risks generally incident to the ownership and rental of residential real estate, in many cases heightened as a result of the impact of the COVID-19 pandemic (see “— Our business, results of operations, financial condition, and cash flows may be adversely affected by pandemics and outbreaks of infectious disease, particularly the ongoing COVID-19 pandemic ”), many of which are beyond our control, including, without limitation:

• adverse macroeconomic conditions, including inflation, rising interest rates, slower growth, or recession;

Our operating results are subject to risks generally incident to the ownership and rental of residential real estate, many of which are beyond our control, including, without limitation:

• unfavorable global and United States economic conditions (including inflation and interest rates), uncertainty in financial markets, and geopolitical tensions;

• changes in national, regional, or local economic, demographic, or real estate market conditions;

15 unchanged sentences

• changes in laws, including those that increase operating expenses or limit our ability to increase rental rates.

See “— Tenant relief laws, including laws regulating evictions, rent control laws, and other regulations that limit our ability to increase rental rates may negatively impact our rental income and profitability ”;

See “— Eviction, tenant rights, rent control, and rent stabilization laws, and other similar laws and/or regulations that limit our ability to collect rent, enforce remedies for failure to pay rent, or increase rental rates may negatively impact our rental income and profitability ”;

• the impact of potential reforms relating to government-sponsored enterprises involved in the home finance and mortgage markets;

• rules, regulations and/or policy initiatives by government and private actors, including HOAs, to discourage or restrict the purchase or operation of single-family properties by entities owned or controlled by institutional investors;

• the potential effects of climate change, related regulatory policies and/or investor responses and expectations, and the transition to a lower-carbon economy;

• the potential effects of climate change, related regulatory policies, legislation, and/or investor responses and expectations, and the transition to a lower-carbon economy;

• disputes and potential negative publicity in connection with eviction proceedings;

8 unchanged sentences

Any one or more of these factors could adversely affect our business, financial condition, and results of operations.

Our business, results of operations, financial condition, and cash flows may be adversely affected by pandemics and outbreaks of infectious disease, particularly the ongoing COVID-19 pandemic.

A significant outbreak of infectious disease or a pandemic may result in a widespread health crisis, which has been the case for the currently ongoing COVID-19 pandemic, and may lead to an economic downturn that could negatively affect our business, results of operations, and financial condition.

To the extent our current or prospective residents experience unemployment, deteriorating financial conditions, and declines in household income, they may be unwilling or unable to pay rent in full on a timely basis or renew or enter into new leases for our homes, and our revenues and operating results could be negatively affected.

The ongoing COVID-19 outbreak in the United States has led entities directed by, or notionally affiliated with, the federal government as well as certain states, counties, and cities, including those in which we own properties and where our principal places of business are located, to impose ongoing measures in response to the COVID-19 pandemic, including temporary eviction moratoriums if certain criteria are met by residents, deferral of missed rent payments without incurring late fees, and restrictions on rent increases.

Jurisdictions and other local and national authorities may expand or extend measures imposing restrictions on our ability to enforce residents’ contractual rental obligations and limiting our ability to collect and increase rents.

While such measures are likely to enable residents to stay in their homes despite an inability to pay because of financial or other hardship stemming from the pandemic, they restrict our ability to collect rent or enforce remedies for failure to pay rent and are likely to result in loss of rental income and other property income.

We continue to work with residents experiencing financial hardship to find solutions that keep them in their homes.

This includes continuing to provide residents with information about rental assistance programs for which they may be eligible, application instructions, necessary documentation, and owner requirements.

We cannot predict if states, municipalities, local, and/or national authorities will renew, extend, or expand existing restrictions, if additional states or municipalities will implement similar restrictions, or when restrictions currently in place will expire.

We also cannot predict if the federal government, states, or local authorities will continue to offer rental assistance programs to residents and landlords or if such programs will be available to our residents (and if they are available, whether residents will take advantage of them).

Our residents’ inability or refusal to meet their lease obligations has reduced and may continue to reduce our cash flows, and the resulting impact on rental and other property income could impact our ability to make all required debt service payments and to continue paying dividends to our stockholders at expected levels or at all.

Additionally, prolonged impact of the COVID-19 pandemic and related containment measures may also continue to interfere with the ability of our suppliers and other business partners to carry out their assigned tasks or supply materials, products, services, or funding (in the case of our revolving credit facility) at ordinary levels of performance relative to the conduct of our business.

The pandemic has also exacerbated many of the other risks discussed in this “Risk Factors” section.

A general decline in business activity and demand for real estate transactions resulting from the COVID-19 pandemic, or a future pandemic, could adversely affect (1) our ability to acquire or dispose of single-family homes on terms that are attractive or at all and (2) the value of our homes and our business such that we may recognize impairment on the carrying value of our investments in single-family residential properties and other assets subject to impairment review, including, but not limited to, goodwill.

An economic downturn resulting from the COVID-19 pandemic, or a future pandemic, and a disruption of, and/or instability in, the global financial markets or deteriorations in credit and financing conditions may affect our access to capital necessary to fund business operations, including acquisitions, or address maturing liabilities on a timely basis.

Our associates continue to face COVID-19 health risks.

If a significant number of our associates, or if key personnel, are unable to work as a result of COVID-19, or a future pandemic, this could adversely impact our business and operating results.

In addition, extended periods of remote work arrangements resulting from outbreaks of infectious disease could strain our business continuity plans, introduce operational risk, including, but not limited to cybersecurity risks, and impair our ability to manage our business.

In addition, we are experiencing disruptions from workforce turnover, due to a scarcity of talent, as businesses emerging from the pandemic compete for personnel, and rising labor costs.

Many of our positions require specialized skill sets resulting in a longer than average time period to fill vacant positions.

A sustained labor shortage or increased employee turnover rate caused by COVID-19 or as a result of general macroeconomic factors could lead to increased costs and increased wage rates to attract and retain associates.

Labor shortages and absenteeism associated with COVID-19 may also continue to interfere with the ability of our associates to carry out their assigned tasks in a timely manner.

We are closely tracking developments regarding federal, state, or local vaccine mandates and testing requirements.

Although we cannot predict with certainty the impact that any potential vaccine mandates and any other related measures may have on our workforce and operations, potential vaccine mandates’ compliance may result in increased operating costs, loss of productivity, labor disruptions, or associate attrition.

The extent to which the COVID-19 pandemic ultimately impacts our operations depends on ongoing developments, which remain highly uncertain and cannot be predicted with confidence, including the scope, duration, and severity of COVID-19 and the proliferation of variants, the extent and duration of actions taken to contain the pandemic or mitigate its impact, the availability, distribution, acceptance, and efficacy of vaccines and therapeutic drugs, the implementation of any federal, state, or local vaccine mandates, and the direct and indirect economic effects of the pandemic, containment measures, monetary and/or fiscal policies implemented to provide support or relief to businesses and/or residents, and other government, regulatory, and/or legislative changes precipitated by the COVID-19 pandemic, among others.

Nevertheless, the COVID-19 pandemic presents material uncertainty and risk with respect to our financial condition, results of operations, and cash flows.

While we have taken steps to mitigate the impact of the pandemic on our results of operations, there can be no assurance that these efforts will be successful.

We are employing a business model with a limited track record, which may make our business difficult to evaluate.

Until recently, the single-family rental business was comprised primarily of private and individual investors in local markets and was managed individually or by small, non-institutional owners and property managers.

Our business strategy involves purchasing, renovating, maintaining, and managing a large number of residential properties and leasing them to qualified residents.

Entry into this market by large, well-capitalized investors is a relatively recent trend, so few peer companies exist and none have yet established long-term track records that might assist us in predicting whether our business model and investment strategy can be implemented and sustained over an extended period of time.

It may be difficult for you to evaluate our potential future performance without the benefit of established long-term track records from companies implementing a similar business model.

We may encounter unanticipated problems as we continue to refine our business model, which may adversely affect our results of operations and ability to make distributions to our stockholders and cause our stock price to decline significantly.

We have a limited operating history and may not be able to operate our business successfully or generate sufficient cash flows to make or sustain distributions to our stockholders.

We have a limited operating history.

As a result, an investment in our common stock may entail more risk than an investment in the common stock of a real estate company with a substantial operating history.

If we are unable to operate our business successfully, we would not be able to generate sufficient cash flow to make or sustain distributions to our stockholders, and you could lose all or a portion of the value of your ownership in our common stock.

Our ability to successfully operate our business and implement our operating policies and investment strategy depends on many factors, including:

• our ability to effectively manage renovation, maintenance, marketing, and other operating costs for our properties;

• economic conditions in our markets, including changes in employment and household earnings and expenses, as well as the condition of the financial and real estate markets and the economy, in general;

• our ability to maintain high occupancy rates and target rent levels;

• the availability of, and our ability to identify, attractive acquisition opportunities consistent with our investment strategy;

• our ability to compete with other investors entering the single-family rental industry;

• costs that are beyond our control, including title litigation, litigation with residents or tenant organizations, legal compliance, property taxes, HOA fees, and insurance;

• judicial and regulatory developments affecting landlord-tenant relations that may affect or delay our ability to dispossess or evict occupants or increase rental rates;

• reversal of population, employment, or homeownership trends in our markets;

• interest rate levels and volatility, which may affect the accessibility of short-term and long-term financing on desirable terms.

In addition, we face significant competition in acquiring attractive properties on advantageous terms, and the value of the properties that we acquire may decline substantially after we purchase them.

We may not be able to effectively manage our growth, and any failure to do so may have an adverse effect on our business and operating results.

12 unchanged sentences

Our rental income is affected by many factors beyond our control, such as the availability of alternative rental housing and economic conditions in our markets.

In addition, state and local regulations may require us to maintain properties that we own, even if the cost of maintenance is greater than the value of the property or any potential benefit from renting the property, or pass regulations that limit our ability to increase rental rates.

In addition, state and local regulations may require us to maintain properties that we own, even if the cost of

maintenance is greater than the value of the property or any potential benefit from renting the property, or pass regulations that limit our ability to increase rental rates.

As a result, we may not be able to fully offset rising costs and capital spending by increasing rental rates, which could have a material adverse effect on our results of operations and cash available for distribution.

8 unchanged sentences

Property taxes, HOA fees, and insurance premiums are subject to significant increases, which can be outside of our control.

If the costs associated with property taxes, HOA fees and assessments, or insurance rise significantly and we are unable to increase rental rates due to rent control laws or other regulations to offset such increases, our results of operations would be negatively affected.

If the costs associated with property taxes, HOA fees and assessments, or insurance rise significantly and we are unable to increase rental rates due to current market conditions, rent control laws, or other regulations to offset such increases, our results of operations would be negatively affected.

Inflation could adversely affect our business and financial results.

Inflation, which increased significantly during 2021, has adversely affected us by increasing the costs of products, materials, and labor needed to operate our business and could continue to adversely affect us in future periods.

Inflation, which continued to increase during 2022, has adversely affected us by increasing the costs of products, materials, and labor needed to operate our business and could continue to adversely affect us in future periods.

The effects of inflation on our financial condition and results of operations over the past few years are primarily related to increased operating costs for the procurement of goods and service and compensation of our associates, including benefits, and financing costs in the form of interest expense.

Continued inflationary pressures could have a material impact on our results of operations in the future.

In an inflationary environment, we may not be able to raise rents sufficiently to keep up with the rate of inflation.

Actions by the government to stimulate the economy may increase the risk of significant inflation, which may have an adverse impact on our business or financial results.

High levels of inflation may also negatively impact consumer income and spending, among other factors, which may adversely impact our business, financial condition, cash flows, and results of operations.

Actions by the government to stimulate the economy may increase the risk of significant inflation, which may also have an adverse impact on our business or financial results.

We recorded net losses in the past and we may experience net losses in the future.

We recorded consolidated net losses for the year ended December 31, 2018.

We have recorded consolidated net losses in the past.

These net losses were inclusive in each period of significant non-cash charges, consisting primarily of depreciation and amortization expense.

8 unchanged sentences

If we are unable to hire and retain qualified associates as required, our growth and operating results could be adversely affected.

Our ability to meet our labor needs while controlling our labor costs is subject to numerous external factors, including unemployment levels, prevailing wage rates, changing demographics, and changes in employment legislation.

High unemployment levels and federal unemployment subsidies, including unemployment benefits offered in response to the COVID-19 pandemic, may have adversely affected the labor force available to us or increased labor costs.

We are also experiencing and may continue to experience additional pressure due to labor shortages and absenteeism associated with COVID-19, together with the impact of the continued elevated demand.

Our ability to meet our labor needs while controlling our labor costs is subject to numerous external factors, including unemployment levels, prevailing wage rates, rising inflation, changing demographics, and changes in employment legislation.

High unemployment levels and federal unemployment subsidies may adversely affect the labor force available to us or increased labor costs.

In addition, we continue to experience disruptions from workforce turnover due to a scarcity of talent, as businesses compete for personnel, and rising labor costs.

Many of our positions require specialized skill sets resulting in a longer than average time period to fill vacant positions.

We are also experiencing and may continue to experience additional pressure due to labor shortages associated with the impact of continued elevated demand.

If we are unable to retain qualified associates or our labor costs increase significantly, our business operations and our financial performance could be adversely impacted.

Our investments are and will continue to be concentrated in our markets and in the single-family properties sector of the real estate industry, which exposes us to seasonal fluctuations in rental demand and downturns in our markets or in the single-family properties sector.

Our investments in real estate assets are and will continue to be concentrated in our markets and in the single-family properties sector of the real estate industry.

Our investments are and may continue to be concentrated in our markets and in the single-family properties sector of the real estate industry, which exposes us to seasonal fluctuations in rental demand and downturns in our markets or in the single-family properties sector.

Our investments in real estate assets are and may continue to be concentrated in our markets and in the single-family properties sector of the real estate industry.

A downturn or slowdown in the rental demand for single-family housing caused by adverse economic, regulatory, or environmental conditions, or other events, in our markets may have a greater impact on the value of our properties or our operating results than if we had more fully diversified our investments.

1 unchanged sentence

Such seasonal fluctuations may impact our operating results.

In addition to general, regional, national, and international economic conditions, our operating performance will be impacted by the economic conditions in our markets.

In addition to global and United States economic conditions, our operating performance will be impacted by the economic conditions in our markets.

We base a substantial part of our business plan on our belief that property values and operating fundamentals for single-family properties in our markets will continue to improve over the near to intermediate term.

However, these markets have experienced substantial economic downturns in recent years and could experience similar or worse economic downturns in the future.

However, these markets have experienced substantial economic downturns in the past and could experience similar or worse economic downturns in the future.

We can provide no assurance as to the extent property values and operating fundamentals in these markets will improve, if at all.

4 unchanged sentences

We may also acquire properties that we expect to be in good condition only to discover unforeseen defects and problems that require extensive renovation and capital expenditures.

To the extent properties are leased to existing residents, renovations may be postponed until the resident vacates the premises, and we will pay the costs of renovating.

To the extent properties are leased to existing residents, renovations may be postponed until the resident vacates the premises, and we will then incur the costs of renovating.

In addition, from time to time, we may perform ongoing maintenance or make ongoing capital improvements and replacements and perform significant renovations and repairs that resident deposits and insurance may not cover.

1 unchanged sentence

Our properties have infrastructure and appliances of varying ages and conditions.

Consequently, we routinely retain independent contractors and trade professionals to perform physical repair work and are exposed to all of the risks inherent in property renovation and maintenance, including potential cost overruns, increases in labor and materials costs, delays by contractors in completing work, delays in the timing of receiving necessary work permits, delays in receiving materials,

fixtures, or appliances, certificates of occupancy, and poor workmanship.

We have seen a prolonged impact from the pandemic on our industry and business, affecting the ability of our associates, suppliers, and other business partners to carry out their assigned tasks, provide services, or supply materials at ordinary levels of performance relative to the conduct of our business due to labor shortages and supply chain disruptions, among other challenges.

Labor shortages and supply chain disruptions, among other challenges, continue to affect the ability of our associates, suppliers, and other business partners to carry out their assigned tasks, provide services, or supply materials at ordinary levels of performance relative to the conduct of our business.

In addition, we are experiencing disruptions from workforce turnover, affecting the renovation and maintenance of our properties, as businesses emerging from the pandemic compete for personnel.

Many of our positions require specialized skill sets resulting in a longer than average time period to fill position vacancies.

If our assumptions regarding the costs or timing of renovation and maintenance across our properties prove to be materially inaccurate, our operating results and ability to make distributions to our stockholders may be adversely affected.

If our assumptions regarding the costs or

timing of renovation and maintenance across our properties prove to be materially inaccurate, our operating results and ability to make distributions to our stockholders may be adversely affected.

We face significant competition in the leasing market for quality residents, which may limit our ability to lease our single-family homes on favorable terms.

10 unchanged sentences

Continuing development of apartment buildings and condominium units in many of our markets will increase the supply of housing and exacerbate competition for residents.

In addition, improving economic conditions, along with the availability of low residential mortgage interest rates and government sponsored programs to promote home ownership, have made home ownership more accessible for potential renters who have strong credit.

These factors may encourage potential renters to purchase residences rather than lease them, thereby causing a decline in the number and quality of potential residents available to us.

In addition, government sponsored programs to promote home ownership may encourage potential renters to purchase residences rather than lease them, thereby causing a decline in the number and quality of potential residents available to us.

No assurance can be given that we will be able to attract and retain suitable residents.

4 unchanged sentences

The following factors, among others, may make acquisitions more expensive:

• improvements in the overall economy and employment levels;

• improvements in overall economic conditions and employment levels;

• greater availability of consumer credit;

2 unchanged sentences

• tax or other government incentives that encourage homeownership.

A general decline in business activity and demand for real estate transactions could adversely affect our ability to acquire or dispose of single-family homes on terms that are attractive or at all.

A general decline in business activity and demand for real estate transactions could adversely affect our ability to acquire or dispose of single-family homes on terms that are attractive or at all, which may be impacted in periods of rising interest rates.

We plan to continue acquiring properties as long as we believe such properties offer an attractive total return opportunity.

Accordingly, future acquisitions may have lower yield characteristics than recent past and present opportunities and, if such future acquisitions are funded through equity issuances, the yield and distributable cash per share will be reduced, and the value of our common stock may decline.

Accordingly, future acquisitions may have lower yield characteristics than recent past and present opportunities and, if such future acquisitions are funded through equity issuances, the yield and distributable cash per share may be reduced, and the value of our common stock may decline.

Competition in identifying and acquiring our properties could adversely affect our ability to implement our business and growth strategies, which could materially and adversely affect us.

7 unchanged sentences

As a result, there can be no assurance that we will be able to identify and finance investments that are consistent with our investment objectives or to achieve positive investment results, and our failure to accomplish any of the foregoing could have a material adverse effect on us and cause the value of our common stock to decline.

We depend on our residents and their willingness to meet their lease obligations and renew their leases for substantially all of our revenues.

Poor resident selection, defaults, and non-renewals by our residents may adversely affect our reputation, financial performance, and ability to make distributions to our stockholders.

We depend on rental income from residents for substantially all of our revenues.

As a result, our success depends in large part upon our ability to attract and retain qualified residents for our properties.

Our reputation, financial performance, and ability to make distributions to our stockholders would be adversely affected if a significant number of our residents fail to meet their lease obligations or fail to renew their leases.

For example, residents may default on rent payments, make unreasonable and repeated demands for service or improvements, make unsupported or unjustified complaints to regulatory or political authorities, use our properties for illegal purposes, damage or make unauthorized structural changes to our properties that are not covered by security deposits, refuse to leave the property upon termination of the lease, engage in domestic violence or similar disturbances, disturb nearby residents with noise, trash, odors, or eyesores, fail to comply with HOA regulations, sublet to less desirable individuals in violation of our lease, or permit unauthorized persons to live with them.

We have been experiencing lower collections from residents with accounts receivable balances that are aged greater than 30 days, or bad debt, and we may experience higher resident turnover.

Damage to our properties may delay re-leasing, necessitate expensive repairs, or impair the rental income or value of the property resulting in a lower than expected rate of return.

Increases in unemployment levels and other adverse changes in economic conditions in our markets could result in substantial resident defaults.

In the event of a resident default or bankruptcy, we may experience delays in enforcing our rights as landlord at that property and will incur costs in protecting our investment and re-leasing the property.

Furthermore, we rely on information supplied by prospective residents in making resident selections, which may in some cases be false.

See “— We rely on information supplied by prospective residents in managing our business.

Compliance with governmental laws, regulations, and covenants that are applicable to our properties or that may be passed in the future, including affordability covenants, permit, license, and zoning requirements, may adversely affect our ability to make future acquisitions, renovations, or dispositions, result in significant costs, delays, or losses, and adversely affect our growth strategy.

Rental homes are subject to various federal, state, and local laws and regulatory requirements, including permitting, licensing, and zoning requirements.

Local regulations, including municipal or local ordinances, restrictions, and restrictive covenants imposed by community developers may restrict our use of our properties and may require us to obtain approval from local officials or community standards organizations at any time with respect to our properties, including prior to acquiring any of our properties or when undertaking renovations of any of our existing properties.

Among other things, these restrictions may relate to fire and safety, seismic, asbestos-cleanup, or hazardous material abatement requirements.

Local regulations, including municipal or local ordinances, restrictions, and restrictive covenants imposed by community developers may restrict our or the use of our properties and may require us to obtain approval from local officials or community standards organizations at any time with respect to our properties, including prior to acquiring any of our properties or when undertaking renovations of any of our existing properties.

Among other things,

these restrictions may relate to fire and safety, seismic, asbestos-cleanup, or hazardous material abatement requirements.

Such local regulations may cause us to incur additional costs to renovate or maintain our properties in accordance with the particular rules and regulations.

6 unchanged sentences

Our failure to obtain such permits, licenses, and approvals could have a material adverse effect on us and cause the value of our common stock to decline.

Tenant relief laws, including laws regulating evictions, rent control laws, and other regulations that limit our ability to increase rental rates may negatively impact our rental income and profitability.

Eviction, tenant rights, rent control, and rent stabilization laws, and other similar laws and/or regulations that limit our ability to collect rent, enforce remedies for failure to pay rent, or increase rental rates may negatively impact our rental income and profitability.

As the landlord of numerous properties, we are involved from time to time in evicting residents who are not paying their rent or who are otherwise in material violation of the terms of their lease.

1 unchanged sentence

The eviction process is typically subject to legal barriers, mandatory “cure” policies, our internal policies and procedures, and other sources of expense and delay, each of which may delay our ability to gain possession and stabilize the property.

Additionally, state and local landlord-tenant laws may impose legal duties to assist residents in relocating to new housing, or restrict the landlord’s ability to remove the resident on a timely basis or to recover certain costs or charge residents for damage residents cause to the landlord’s premises.

Since the onset of the COVID-19 pandemic, there has been an increase in restrictions and other regulations regarding evictions and expansion of tenant rights by federal, state, and local governments and courts, continuing to result in additional legal and regulatory hurdles to the eviction process.

Additionally, eviction proceedings by owners and operators of single-family homes for lease have been the focus of negative media attention, which damages our reputation.

State and local landlord-tenant laws may impose legal duties to assist residents in relocating to new housing, or restrict the landlord’s ability to remove the resident on a timely basis or to recover certain costs or charge residents for damage residents cause to the landlord’s premises.

Because such laws vary by state and locality, we must be familiar with and take all appropriate steps to comply with all applicable landlord-tenant laws and need to incur supervisory and legal expenses to ensure such compliance.

To the extent that we do not comply with state or local laws, we may be subjected to civil litigation filed by individuals, in class actions or actions by state or local law enforcement and our reputation and financial results may suffer.

We may be required to pay our adversaries’ litigation fees and expenses if judgment is entered against us in such litigation or if we settle such litigation.

Furthermore, state and local governmental agencies may introduce rent control laws or other regulations that limit our ability to increase rental rates, which may affect our rental income.

2 unchanged sentences

For example, in 2019, the state of California passed the Tenant Protection Act of 2019, a rent control law which limits our ability to increase rental rates for existing residents and put into place protections for the terminations of tenancies.

We believe this law negatively affects our rental income from certain of the 12,280 homes we own in California as of December 31, 2021.

See “— Our business, results of operations, financial condition, and cash flows may be adversely affected by pandemics and outbreaks of infectious disease, particularly the ongoing COVID-19 pandemic .”

We may become a target of legal demands, litigation (including class actions), and negative publicity by tenant and consumer rights organizations, which could directly limit and constrain our operations and may result in significant litigation expenses and reputational harm.

Numerous tenant rights and consumer rights organizations exist throughout the country and operate in our markets, and we may attract attention from some of these organizations and become a target of legal demands, litigation, and negative publicity.

Many such consumer organizations have become more active and better funded in connection with mortgage foreclosure-related issues;

and with the increased market for homes arising from displaced homeownership, some of these organizations may shift their litigation, lobbying, fundraising, and grass roots organizing activities to focus on landlord-resident issues.

While we intend to conduct our business lawfully and in compliance with applicable landlord-tenant and consumer laws, such organizations might work in conjunction with trial and pro bono lawyers in one or multiple states to attempt to bring claims against us on a class action basis for damages or injunctive relief and to seek to publicize our activities in a negative light.

This law has negatively impacted our rental income from certain of the 12,216 homes we own in California as of December 31, 2022, and may continue to do so.

To the extent that we do not comply with laws and regulations regarding eviction, tenant rights, rent control, rent stabilization, and similar matters, we may be subjected to civil litigation filed by individuals (including class actions) or actions by federal, state, or local law enforcement and, as a result, our reputation and financial results may suffer.

We may be required to modify or cease existing business practices, pay fines and/or our adversaries’ litigation fees and expenses if judgment is entered against us in such litigation or if we settle such litigation.

Given increasing political support for these types of laws and regulations, we believe these conditions will continue to negatively impact our business and results of operations.

We are subject to regulatory proceedings, litigation (including class actions) and may become a target of legal demands and/or negative publicity from tenant and consumer advocacy organizations, which could directly limit and constrain our operations and may result in significant litigation expenses and reputational harm.

We are involved in a range of legal and regulatory proceedings, claims, actions, inquiries, and investigations in the ordinary course of business.

These legal and regulatory proceedings may include, among others, eviction proceedings and other landlord-tenant disputes, challenges to title and ownership rights, Fair Housing or other discrimination claims, disputes arising over potential violations of HOA rules and regulations, issues with local housing officials arising from the condition or maintenance of the property, outside vendor disputes, and trademark infringement and other intellectual property claims.

Additionally, we may attract attention and become a target of legal demands, litigation, and negative publicity from tenant and consumer advocacy organizations.

Such organizations may lobby federal, state, and local legislatures to pass new laws and regulations to constrain or limit our business operations, adversely impact our business, or may generate negative publicity for our business and harm our reputation.

Our industry is under increasing political and regulatory scrutiny, resulting in governmental inquiries relating to the conduct of our business generally and during the COVID-19 pandemic.

These actions or inquiries may be costly to comply with, result in negative publicity and reputational damage, require significant management time and attention, and subject us to expenses and remedies that may harm our business, including fines or demands or orders that we modify or cease existing business practices.

Additionally, we may become subject to legal claims against us (including on a class action basis) for damages or injunctive relief and to seek to publicize our activities in a negative light.

We cannot anticipate what form such legal actions might take or what remedies they may seek.

Additionally, such organizations may lobby local county and municipal attorneys or state attorneys general to pursue enforcement or litigation against us, may lobby state and local legislatures to pass new laws and regulations to constrain or limit our business operations, adversely impact our business, or may generate negative publicity for our business and harm our reputation.

If they are successful in any such endeavors, they could directly limit and constrain our operations and may impose on us significant litigation expenses, including settlements to avoid continued litigation or judgments for damages or injunctions.

Although we are not involved in any legal or regulatory proceedings that we expect would have a material adverse effect on our business, results of operations, or financial condition, such proceedings may impose on us significant litigation expenses, including settlements to avoid continued litigation or judgments for damages or injunctions.

Our business is subject to laws and regulations regarding privacy, data protection, consumer protection, and other matters.

15 unchanged sentences

We are subject to numerous, complex, and frequently changing laws, regulations, and contractual obligations designed to protect personal information.

Various federal and state privacy and data security laws, such as the California Consumer Privacy Act and Nevada Privacy Law, or other regulatory standards create data privacy rights for users, including more ability to control how their data is shared with third parties.

These laws and regulations, as well as any associated inquiries or investigations or any other government actions, may be costly to comply with, result in negative publicity, require significant management time and attention, and subject us to remedies that may harm our business, including fines or demands or orders that we modify or cease existing business practices.

Various federal and state privacy and data security laws, such as the California Consumer Privacy Act, further expanded by the California Privacy Rights Act, and Nevada Privacy Law, or other regulatory standards create data privacy rights for users, including more ability to control how their data is shared with third parties.

These laws and regulations, as well as any associated inquiries or investigations or any other government actions, may be costly to comply with, require significant management time and attention, and subject us to remedies that may harm our business, including fines and other sanctions resulting from any related breaches of data privacy regulations or demands or orders that we modify or cease existing business practices.

Accidental or willful security breaches or other unauthorized access to our information systems or the systems of our service providers, or the existence of computer viruses or malware (such as ransomware) in our or their data or software could expose us to a risk of information loss, business disruption, and misappropriation of proprietary and confidential information, including information relating to our residents and the personal information of our associates or third parties.

Such an event could disrupt our business and result in, among other things, unfavorable publicity, damage to our reputation, loss of our competitive information, litigation by affected parties and possible financial obligations for liabilities and damages related to the theft or misuse of such information, significant remediation costs, disruption of key business operations and significant diversion of our resources, as well as, any of which could have a material adverse effect on our business, profitability and financial condition.

See “— Security breaches and other disruptions could compromise our information systems and expose us to liability, which would cause our business and reputation to suffer.

Our evaluation of properties involves a number of assumptions that may prove inaccurate, which could result in us paying too much for properties we acquire and/or overvaluing our properties or our properties failing to perform as we expect.

9 unchanged sentences

For example, we typically engage third party home improvement professionals with respect to certain maintenance and specialty services, such as HVAC, roofing, painting, and floor installations.

Selecting, managing,

and supervising these third party service providers requires significant resources and expertise, and because our portfolio consists of geographically dispersed properties, our ability to adequately select, manage, and supervise such third parties may be more limited or subject to greater inefficiencies than if our properties were more geographically concentrated.

An overall labor shortage experienced by our vendors, lack of skilled labor, increased turnover, or labor inflation, caused by COVID-19 or as a result of general macroeconomic factors, could have a material adverse impact on our business, financial condition, or operating results.

Selecting, managing, and supervising these third party service providers requires significant resources and expertise, and because our portfolio consists of geographically dispersed properties, our ability to adequately select, manage, and supervise such third parties may be more limited or subject to greater inefficiencies than if our properties were more geographically concentrated.

An overall labor shortage experienced by our vendors, lack of skilled labor, increased turnover, or labor inflation, caused by a pandemic or as a result of general macroeconomic factors, could have a material adverse impact on our business, financial condition, or operating results.

We have entered into a multi-year contract with a third party vendor to provide certain services for our properties.

8 unchanged sentences

Poor performance by such third party service providers may reflect poorly on us and could significantly damage our reputation among desirable residents.

In the event of fraud or misconduct by a third party, we could also be exposed to material liability and be held responsible for damages, fines, or penalties and our reputation may suffer.

In the event of fraud or misconduct by a third

party, we could also be exposed to material liability and be held responsible for damages, fines, or penalties and our reputation may suffer.

In the event of failure by our general contractors to pay their subcontractors, our properties may be subject to filings of mechanics or materialmen liens, which we may need to resolve to remain in compliance with certain debt covenants, and for which indemnification from the general contractors may not be available.

31 unchanged sentences

To the extent we pursue such remedies, we may not be able to successfully prevail against the purchaser.

Our strategy to acquire homes from third party homebuilders could subject us to significant risks that could adversely affect our financial condition, cash flows, and operating results.

Our strategy to acquire homes from third party homebuilders could subject us to significant risks that could adversely affect our financial condition, cash flows, and operating results, and the strategy may be restricted by governmental regulations and zoning requirements.

We recently began, and expect to continue, entering into contracts with homebuilder counterparties for the acquisition of new homes.

1 unchanged sentence

We have made commitments for future fundings, and there can be no assurance that funding will be available to us for such purposes.

This strategy depends on the performance of our counterparties.

Additionally, if home values decline subsequent to when we entered into contracts with homebuilder counterparties, we may not be able to adjust our contractual acquisition prices to reflect the decreased home values.

This strategy depends on the performance of our counterparties and the ability of homebuilders to develop new homes specifically for our purchase.

We rely on builder counterparties to acquire land suitable for residential building in our markets, and to deliver quality homes at reasonable prices in a timely manner, in accordance with agreed to specifications.

A failure of builder counterparties to perform in accordance with the terms of our

agreements, could have a material adverse effect on our business.

A failure of builder counterparties to perform in accordance with the terms of our agreements, could have a material adverse effect on our business.

Further, poor performance by homebuilder counterparties may reflect poorly on us and could damage our reputation.

Additionally, governmental laws, regulations, and zoning requirements may be imposed that restrict our ability to purchase homes from third party homebuilders that are intended for rental purposes in areas where we would like to invest.

Contingent or unknown liabilities could adversely affect our financial condition, cash flows, and operating results.

6 unchanged sentences

We may not discover such restrictions during the acquisition process and such restrictions may adversely affect our ability to operate such properties as we intend.

In particular, under a Florida statutory framework implemented by certain Florida jurisdictions, a violation of the relevant building codes, zoning codes, or other similar regulations applicable to a property may result in a lien on that property and all other properties owned by the same violator and located in the same county as the property with the code violation, even though the other properties might not be in violation of any code.

violation, even though the other properties might not be in violation of any code.

Until a municipal inspector verifies that the violation has been remedied and any applicable fines have been paid, additional fines accrue on the amount of the lien and the lien may not be released, in each case even at those properties that are not in violation.

18 unchanged sentences

As we make more of our services available over the internet, we subject ourselves to new types of leasing fraud risk.

We use a variety of tools to protect against fraud;

Unrelated third parties have developed “fake landlord” scams posing as Invitation Homes and fraudulently collecting rent on properties they do not own.

Furthermore, increases in fraudulent applications lead to a higher rate of delinquency, and coupled with lingering effects of COVID-19 pandemic and legal and regulatory barriers to the eviction process, it allows for unqualified residents to remain in our homes for longer periods of time.

We devote significant resources to discover and discourage fraudulent activities, and we use a variety of tools to protect against fraud;

however, these tools may not always be successful.

Allegations of fraud may result in fines, settlements, litigation expenses, and reputational damage.

Fraudulent activities could result in lost revenue and increased expenses, including costs related to damages to our homes from occupants who do not maintain them, diversion of time from our personnel, and development of measures to combat these activities, or otherwise disrupt our operations.

Allegations of fraud may further result in fines, settlements, litigation expenses, and reputational damage.

We rely on information supplied by prospective residents in managing our business.

6 unchanged sentences

If resident-supplied information is inaccurate or our residents’ creditworthiness declines over time, we may make poor or imperfect leasing decisions and our portfolio may contain more risk than we believe.

We depend on our residents and their willingness to meet their lease obligations and renew their leases for substantially all of our revenues.

Poor resident selection, defaults, and non-renewals by our residents may adversely affect our reputation, financial performance, and ability to make distributions to our stockholders.

We depend on rental income from residents for substantially all of our revenues.

As a result, our success depends in large part upon our ability to attract and retain qualified residents for our properties.

Additionally, the COVID-19 outbreak, as well as continuing measures taken by governmental authorities and private actors to limit the spread of this virus or mitigate its impact, are interfering with the ability of some of our residents to meet their lease obligations and make their rent payments on time or at all.

Furthermore, entities directed by, or notionally affiliated with, the federal government as well as some state and local jurisdictions across the United States have imposed temporary eviction moratoriums if certain criteria are met by residents, are allowing residents to defer missed rent payments without incurring late fees, and are prohibiting rent increases.

Jurisdictions and other local and national authorities may

expand or extend measures imposing restrictions on our ability to enforce residents’ contractual rental obligations and limiting our ability to increase rents.

Damage to our properties may delay re-leasing after eviction, necessitate expensive repairs, or impair the rental income or value of the property resulting in a lower than expected rate of return.

Increases in unemployment levels and other adverse changes in economic conditions in our markets could result in substantial resident defaults.

Our leases are relatively short-term, exposing us to the risk that we may have to re-lease our properties frequently, which we may be unable to do on attractive terms, on a timely basis, or at all.

4 unchanged sentences

If the rental rates for our properties decrease or our residents do not renew their leases, our operating results and ability to make distributions to our stockholders could be adversely affected.

In addition, most of our potential residents are represented by leasing agents and we may need to pay all or a portion of any related agent commissions, which will reduce the revenue from a particular rental home.

In addition, a portion of our potential residents are represented by leasing agents and we may need to pay all or a portion of any related agent commissions, which will reduce the revenue from a particular rental home.

Alternatively, to the extent that a lease term exceeds one year, we may lose the opportunity to raise rents in an appreciating market and be locked into a lower rent until such lease expires.

1 unchanged sentence

The success of our business model depends, in part, on conditions in the single-family rental market in which we operate.

One of the possible impacts on our results of operations and key operating metrics due to the restrictions on rent increases imposed in certain jurisdictions in response to the COVID-19 pandemic could be a decrease in gross rental revenues and other property income.

One of the possible impacts on our results of operations and key operating metrics due to the ongoing restrictions on rent increases imposed in certain jurisdictions in response to the COVID-19 pandemic could be a decrease in gross rental revenues and other property income.

Our investment strategy is based on assumptions about occupancy levels, rental rates, interest rates, and other factors;

1 unchanged sentence

Multiple economic and demographic factors may contribute to increases or decreases in homeownership rates resulting in fluctuating rental rates and average occupancy levels.

In addition, we expect that as investors like us increasingly seek to capitalize on opportunities to purchase housing assets and convert them to productive uses, the supply of single-family rental properties will decrease, which may increase competition for residents, limit our strategic opportunities, and increase the cost to acquire those properties.

In addition, we expect that as investors like us increasingly seek to capitalize on opportunities to purchase housing assets and convert them to productive uses, the supply of single-family rental properties available to invest in will decrease, which may increase competition for residents, limit our strategic opportunities, and increase the cost to acquire those properties.

A softening of the rental market in our core areas would reduce our rental revenue and profitability.

We may not have control over timing and costs arising from renovating our properties, and the cost of maintaining rental properties is generally higher than the cost of maintaining owner-occupied homes, which will affect our results of operations and may adversely impact our ability to make distributions to our stockholders.

We may not have control over timing and costs arising from renovating our properties, and the cost of maintaining rental properties can be higher than the cost of maintaining owner-occupied homes, which will affect our results of operations and may adversely impact our ability to make distributions to our stockholders.

Renters impose additional risks to owning real property.

2 unchanged sentences

A rental property may need repairs and/or improvements after each resident vacates the premises, the costs of which may exceed any security deposit provided to us by the resident when the rental property was originally leased.

Accordingly, the cost of maintaining rental properties can be higher than the cost of maintaining owner-occupied homes, which will affect our results of operations and may adversely impact our ability to make distributions to our stockholders.

Accordingly, the cost of maintaining rental properties can be higher than the cost of maintaining owner-occupied

homes, which will affect our results of operations and may adversely impact our ability to make distributions to our stockholders.

Declining real estate valuations and impairment charges could adversely affect our financial condition and operating results.

1 unchanged sentence

Such a loss would cause an immediate reduction of net income in the applicable accounting period and would be reflected in a decrease in our balance sheet assets.

The reduction of net income from impairment losses could lead to a reduction in our dividends, both in the relevant accounting period and in future periods.

Even if we do not determine that it is necessary or appropriate to record an impairment loss, a reduction in the intrinsic value of a property would become manifest over time through reduced income from the property and would therefore affect our earnings and financial condition.

8 unchanged sentences

The secure processing and maintenance of such information is critical to our operations and business strategy.

Despite our security measures, our information technology and infrastructure are subject and may be vulnerable to attacks by malicious third parties or breached due to employee error, malfeasance, or other disruptions.

Despite our security measures, our information technology and infrastructure are subject to ongoing threats and attacks and may be vulnerable to attacks by malicious third parties or breached due to employee error, malfeasance, or other disruptions.

Due to the nature of some of the attacks, there is a risk that they may remain undetected for a period of time.

Since the techniques used to obtain unauthorized access to systems, or to otherwise sabotage them, change frequently and are often not recognized until launched against a target, we may be unable to anticipate these techniques or to implement adequate preventative measures.

While we have invested in the protection of data and information technology and implemented processes, procedures, and internal controls that are designed to mitigate cybersecurity risks and cyber intrusions, there can be no assurance that our efforts will prevent cyber incidents or security breaches.

3 unchanged sentences

however, this insurance may not be sufficient to cover the financial, legal, business, or reputational losses that may result from an interruption or breach of our systems.

Business continuity and disaster recovery issues which may result from the current COVID-19 pandemic or any future pandemic could materially interrupt our business operations.

Due to the ongoing spread of COVID-19 cases in states where we operate and in connection with our flexible work arrangements, a significant number of our associates based at our headquarters and local offices continue working remotely.

In connection with our flexible work arrangements, a significant number of our associates based at our headquarters and local offices work remotely on a recurring basis.

An extended period of remote work arrangements could strain our business continuity plans, introduce operational risk, including, but not limited to cybersecurity risks, and impair our ability to manage our business.

United States regulators have also increased their focus on cyber security vulnerabilities and risks.

Compliance with laws and regulations concerning cyber security, data governance, and data protection could result in significant expense, and any failure to comply could result in proceedings against us by regulatory authorities or other third parties.

In March 2022, the SEC proposed amendments to its existing rules to enhance and standardize disclosures regarding cybersecurity risk management, strategy, governance, and cybersecurity incident reporting by all registrants, including us.

The proposed rules, if finalized, impose additional reporting obligations on us, and we could face substantial increased costs.

See “— Our business is subject to laws and regulations regarding privacy, data protection, consumer protection, and other matters.

Many of these laws and regulations are subject to change and uncertain interpretation, and could result in claims, changes to our business practices, monetary penalties, or otherwise harm our business.

Our participation in joint venture investments may limit our ability to invest in certain markets, and we may be adversely affected by our lack of sole decision-making authority, our reliance on joint venture partners’ financial condition, and disputes between us and our joint venture partners.

12 unchanged sentences

Our exposure to liabilities in connection with such property management activities could have an adverse effect on our business and financial results.

We are subject to litigation and regulatory proceedings.

We are involved in a range of legal and regulatory proceedings, claims, actions, inquiries, and investigations in the ordinary course of business.

These legal and regulatory proceedings may include, among others, eviction proceedings and other landlord-tenant disputes, challenges to title and ownership rights, disputes arising over potential violations of HOA rules and regulations, issues with local housing officials arising from the condition or maintenance of the property, outside vendor disputes, and trademark infringement and other intellectual property claims.

Additionally, our industry is under increasing political and regulatory scrutiny resulting in governmental inquiries relating to the conduct of our business generally and during the COVID-19 pandemic specifically, including information relating to compliance with federal eviction moratorium requirements and cooperation with impacted residents to use federal assistance funds as an alternative to eviction.

These actions or inquiries may be costly to comply with, result in negative publicity, require significant management time and attention, and subject us to remedies that may harm our business, including fines or demands or orders that we modify or cease existing business practices.

For example, eviction proceedings by owners and operators of single-family homes for lease have recently been the focus of negative media attention.

We may suffer losses that are not covered by insurance.

4 unchanged sentences

Any and all such severe weather events may be exacerbated by global climate change, resulting in increased insurance premiums and deductibles, or a decrease in the availability of coverage.

See “Risks Related to Environmental, Social, and Governance Issues — We are subject to risks

from natural disasters such as earthquakes and severe weather .” While we have multi-year policies for earthquakes, hurricane, and/or flood risk, our properties may nonetheless incur casualty losses that are not fully covered by insurance.

See “Risks Related to Environmental, Social, and Governance Issues — We are subject to risks from natural disasters such as earthquakes, wildfires, and severe weather .” While we have annual policies for earthquakes, hurricane, and/or flood risk, our properties may nonetheless incur casualty losses that are not fully covered by insurance.

In such an event, the value of the affected properties would be reduced by the amount of any such uninsured loss, and we could experience a significant loss of capital invested and potential revenues in such properties and could potentially remain obligated under any recourse debt associated with such properties.

Inflation, changes in building codes and ordinances, environmental considerations, and other factors might also keep us from using insurance proceeds to replace or renovate a particular property after it has been damaged or destroyed.

Under those circumstances, the insurance proceeds we receive might be inadequate to restore our economic position in the damaged or destroyed property.

Under those circumstances, the insurance proceeds we receive

might be inadequate to restore our economic position in the damaged or destroyed property.

Any such losses could adversely affect us and cause the value of our common stock to decline.

15 unchanged sentences

For example, we may be required to hold our properties for a minimum period of time and comply with certain other requirements in the Internal Revenue Code of 1986, as amended (the “Code”), or dispose of our properties through a taxable REIT subsidiary (“TRS”), in which case we will incur corporate level tax on any net gains from such dispositions.

Our business, results of operations, financial condition, and cash flows may be adversely affected by pandemics and outbreaks of infectious disease.

A significant outbreak of infectious disease, medical epidemic, or a pandemic, such as the COVID-19 pandemic, may result in a widespread health crisis and may lead to an economic downturn that could negatively affect our business, results of operations, and financial condition.

To the extent our current or prospective residents experience unemployment, deteriorating financial conditions, and declines in household income, resulting from medical epidemics or pandemics, they may be unwilling or unable to pay rent in full on a timely basis or renew or enter into new leases for our homes, and our revenues and operating results could be negatively affected.

Measures put in place in response to a pandemic such as temporary eviction moratoriums if certain criteria are met by residents, deferral of missed rent payments without incurring late fees, and restrictions on rent increases may impose restrictions on our ability to enforce residents’ contractual rental obligations and limit our ability to collect and increase rents, which has been the case with COVID-19.

Our residents’ inability or refusal to meet their lease obligations may reduce our cash flows, which has been the case with COVID-19.

The resulting impact from a future pandemic or outbreak of infectious disease on rental and other property income could impact our ability to make all required debt service payments and to continue paying dividends to our stockholders at expected levels or at all.

Additionally, the lingering impact of a pandemic and related containment measures may interfere with the ability of our suppliers and other business partners to carry out their assigned tasks or supply materials, products, services, or funding (in the case of our revolving credit facility) at ordinary levels of performance relative to the conduct of our business, which has been the case with COVID-19.

A general decline in business activity and demand for real estate transactions resulting from a pandemic could adversely affect (1) our ability to acquire or dispose of single-family homes on terms that are attractive or at all and (2) the value of our homes and our business such that we may recognize impairment on the carrying value of our investments in single-family residential properties and other assets subject to impairment review, including, but not limited to, goodwill.

An economic downturn resulting from a pandemic, and a disruption of, and/or instability in, the global financial markets or deteriorations in credit and financing conditions may affect our access to capital necessary to fund business operations, including acquisitions, or address maturing liabilities on a timely basis.

The extent to which the COVID-19 pandemic, or any future pandemic, ultimately impacts our operations depends on future developments, which remain highly uncertain and cannot be predicted with confidence, including the scope of the pandemic, the proliferation of variants, the availability, distribution, acceptance, and efficacy of vaccines and therapeutic drugs, and the direct and indirect economic effects of the pandemic, containment measures, monetary and/or fiscal policies implemented to provide support or relief to businesses and/or residents, and other government, regulatory, and/or legislative changes precipitated by a pandemic, among others.

Disease outbreaks, epidemics, pandemics, or similar widespread public health concerns and the volatile regional and global economic conditions stemming therefrom, as well as reactions to future pandemics or resurgences of COVID-19, could also precipitate or aggravate the other risk factors set forth in this Annual Report on Form 10-K, which in turn could materially adversely affect our business, financial condition and results of operations.