NAICS for Rental Property: A Guide for Real Estate Investors

As a real estate investor, do you need a NAICS code for your rental property? Having the right NAICS designation matching your rental operations provides relevant data, supports compliance, and boosts credibility for financing.

By
Nichole Stohler
|
Last Updated
March 26, 2024
NAICS for Rental Property: A Guide for Real Estate Investors

As a real estate investor, have you ever wondered how your rental business is classified and what its implications are? The answer lies in a seemingly innocuous 6-digit code — your NAICS code.

Having the right NAICS code allows you to benchmark key metrics like occupancy rates and operating costs against comparable rental property owners. It provides access to relevant market data and analysis for your particular real estate niche. This apples-to-apples information can help guide your business decisions and strategies.

In this article, we'll explore why NAICS codes matter for real estate investors and how to determine the codes specific to your rental activities. Understanding and properly utilizing these codes can provide a competitive advantage in the rental market.

What is a NAICS code?

A NAICS code is a system used to classify businesses based on their primary economic activity. Developed jointly by statistical agencies in the U.S., Canada, and Mexico, these codes provide a framework to analyze and report industry statistics across North America.

Each business type receives a 6-digit code that summarizes the nature of its operations, eliminating the need for detailed descriptions. This coding then allows for categorization and analysis by government agencies, financial institutions, and data companies.

Your NAICS code helps to instantly convey where your core revenue stream comes from, whether this is from primarily leasing residential buildings or providing property management services.

Why do real estate investors need NAICS codes?

Real estate investors need NAICS codes to help with:

  • Classification: The code categorizes your business type, such as owning residential buildings and dwellings or managing real estate for others.
  • Data analysis: Having your NAICS code allows accurate tracking and benchmarking against others in your specific rental or leasing niche.
  • Compliance: Many government agencies and lenders require the correct NAICS code for tax purposes, securing loans, permits, etc.

Finding the NAICS code for rental properties

Establishments renting real estate can find the NAICS code for their business from a few main sources:

  1. The NAICS website, owned by the U.S. Census Bureau, provides the full manual with NAICS code descriptions to help you identify the right one for your business.
  2. Business and professional associations like the National Apartment Association or your local realtor/landlord groups can provide guidance on which NAICS codes to use.
  3. Attorneys, accountants, or other professional service providers familiar with the industry can assist in determining the right NAICS code for your rental operations.

Popular NAICS codes for real estate

Here are some of the main NAICS codes relevant or closely related to real estate:

531110: Lessors of residential buildings and dwellings

This NAICS code is for establishments primarily engaged in renting or leasing residential real estate and managing home rental properties. It includes areas like:

  • Apartment buildings and complexes.
  • Single-family homes.
  • Leasing duplex houses.
  • Town homes.
  • Residential buildings owned by housing authorities.
  • Residential hotel rental.
  • Leasing retirement hotel rental.

531120: Lessors of non-residential buildings

This NAICS code covers establishments primarily engaged in renting non-residential property types like office buildings, retail spaces, or industrial buildings.

531130: Lessors of mini warehouses and self-storage units

This NAICS code covers establishments primarily engaged in renting or leasing storage properties like self-storage facilities.

531190: Lessors of other real estate property

Comprises establishments primarily engaged in renting or leasing vacant lots, timeshare properties, or land leasing.

531311: Residential property managers

This NAICS code is for those managing residential real estate for others, such as single-family homes or apartment buildings.

531312: Non-residential property managers

This code covers the management of commercial properties like office, retail, and industrial spaces owned by investors.

531390: Other activities related to real estate

This is a catch-all for real estate support services or other businesses not covered elsewhere.

531210: Offices of real estate agents and brokers

This code is for businesses engaged in assisting buyers and sellers in the purchase or sale of real estate.

Decoding rental property NAICS codes

NAICS codes are more than just administrative identifiers for real estate rental businesses. The right 6-digit code gives you access to relevant data for your business so you can benchmark performance metrics.

Your NAICS code also supports compliance and lends credibility if you need to secure loans or set up other financial accounts.

Using NAICS codes provides a competitive advantage that should not be overlooked. Accurate rental classification allows you to effectively manage and analyze your rental operations against peers in your specific market niche.

NAICS code for rental property FAQs

What is the best NAICS code for real estate investing?

The most suitable NAICS code for real estate investing depends on the type of property. However, 531110 is commonly used for residential properties, and 531120 is used for commercial properties.

What is the NAICS code for 531110?

The NAICS code 531110 refers to "Lessors of Residential Buildings and Dwellings." This classification includes establishments primarily engaged in renting or leasing residential real estate, such as single-family homes, town homes, and apartment buildings.

Nichole Stohler

Nichole co-founded Gateway Private Equity Group, with a history of investments in single-family and multi-family properties, and now a specialization in hotel real estate investments. She is also the creator of NicsGuide.com, a blog dedicated to real estate investing.

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