Build-to -Rent Market Expanding Quickly

Build to Rent Homes

Build-to-rent development has emerged over the last year to become one of the hottest new segments of real estate development, with privately held companies as well as the largest publicly traded developers and acquirers of single-family rentals jumping into the market.

Multifamily builders and investors frustrated at high apartment prices and shrinking yields appear to be helping drive the nascent build-to-rent trend.

Lennar, D.R. Horton and KB Homes are among at least a dozen residential builders to get into the business, in some cases selling rentals to the largest publicly-traded single-family rental owners, including Starwood Waypoint Residential Trust.

Industry observers expect an influx of investors into the space in coming years due to the large and rising demand for rental homes by millenial families and others unable or unwilling to assume a home mortgage.

It’s no different that the apartment market, where investors have tried to buy current cash flow, but the cap rates are so low they can get better yield by building new. The same thing is happening now in the single-family market.

For years, home builders ignored the rental market, which makes up 10% of all single-family housing demand with 29% of the nation’s 44.3 million renter households renting a detached single-family dwelling, with another 6% leasing condominiums or townhouses.

These 12.7 million detached home renters have largely been ignored by builders and developers for years as both supply and demand steadily grew over many decades. That’s changing as developers identify and seek to meet rising SFR demand as sales of existing homes shrink the inventory of homes available for rent.

To learn more about build-to-rent homes and investments in sunny SWFL, contact a member of the 9 Core Realty Team!




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