Unidentified Analyst: Just a couple — mainly one general question and that kind of involves the single-family rental business. Has your approach to financing that changed at all with the — I know the mortgage rates, you mentioned were in the high 3s or low 4s. Has there been any change in approach through how the company is anticipating funding future ones with the rise in mortgage rates? Or how are you guys evaluating that?
Mark Harding: That’s a good question. It has. The opportunity for us, we did lock in maybe that $4 million at some very attractive rates, and so we like that, and we will continue to keep those out there. As mortgage rates have gone up to 7% because of we have such strong equity value in that, we may look at instead of financing 80% of that, we may drop that down a bit and finance maybe 50% of that. So it’s — we will still use that financing mechanism. And I’d say we’re going to be indicative to everybody else. It was better for it to be at 3%, 4%. It is not awful for it to be at 7%. And it’s not always going to stay at 7%, right? This is the type of financing activity. And I think that that’s where the millennials that are going to really be looking at buying a house.
And they may be making the decision to buy a house for other reasons other than it’s an investment or it’s that there’s a significant utility value in owning a house. And so taking a 7% mortgage on a house is more traditional and more in line with the long-term projection of that. And so I’d say, yes, we do have an appetite for continuing to finance those out to the extent that we’re getting 4%, 4.5% on that. We may be able to get a better return by financing some of those ourselves because that’s going to provide more cash flow to the bottom line when we have those opportunities to do that, but we’re not going to be overweighted in it either. We like to continue to grow that segment. Our Board has said that this is a great segment for us, but we want to be able to leverage the vertical cost of that.
We’re going to carry forward the equity value, but we want to leverage some of that vertical cost. And 7% is still a very good rate for us to view that as some of the cheaper money because of the mortgage type lending activities there. So you’re going to still see us pursue 50%, 60% of that into the mortgage side.
Unidentified Analyst: Okay. And how do you see the overall rental market right now and maybe projecting going forward? What is the strength or weakness associated with that versus kind of what you guys loosely would underwrite when you’re looking at picking up a home.
Mark Harding: It’s a great question, and it is strengthening. So what you’re seeing is, to the extent that those former buyers that would be out there and maybe they lose the ability to qualify for the same house that they would have wanted at 4% compared to 7%, we’re really getting a lot of referrals from our homebuilders to say, well, if you like the community, why don’t you go talk to the developer who’s got some units that are coming online for rental because it puts them — it locks them into the market, right? There’s that as a component of it. And then the second component of it that I think we’re really excited about is really bringing online our school, right? That’s a sense of community. That’s a sense of place. That’s a sense of education being the initiative of every new subdivision, new community.
