The demand for build-to-rent single-family homes is exploding. According to the National Association of Home Builders, some 43,000 homes were built to rent in 2018, the largest number of built to rent homes in nearly 40 years and nearly double the number of built to rent homes between 1992-2012. Additionally, homebuilders are reimagining this sector and becoming landlords themselves.
Places such as San Antonio are hotspots and investors are pouring into the market get a piece of this pie. AHV Communities, partnering with the Bristol Group, just completed 250 new detached, three and four-bedroom rental homes in a gated community with amenities such as pools, spas, fitness centers, party spaces, dog parks and even dog washing stations. Renters pay between $1,800-$2,300/month.
“Our tenants have annual household incomes of +$100,000 which means that our clientele can afford to buy but choose to rent instead,” said AHV founder and CEO Mark Wolf. “We think there is a major shift in demographics going on. Empty nesters are done taking care of their homes. They want to downsize; they want portability; they want mobility in the lease and meanwhile, Millennial households are not really dialed into taking care of a home. They want to go out and do the same things that Boomers are doing, which is to enjoy life and not work hard for their house.”
The days of renting being seen as a social stigma are over…the days of homeownership as being the underpinnings of the American Dream are over. No. People are moving away from having their identities and their finances tied up homeownership primarily because they don’t want to have to concern themselves with the hidden costs that might occur.
John Burns, Founder and CEO of John Burns Real Estate Consulting, said, “Our business is booming right now with build-to-rent feasibility wok. We are discussing new projects with clients almost daily…and equity is flowing in fast.”
Burns advises other entities and investors to partner with experienced builders such as Lennar and Toll Brothers. “These builders know what they’re doing and have recently started building homes specifically to sell to investors as rentals.”
“Think about it, “ advises Wolf of AHV Communities. “We believe in long-term cash flow so if you hold these properties for 10 years or even for seven, the residential cash flow is worth more when renting than the sale of a property one time.”
Meanwhile, the number of owner-occupied homes is down for the second consecutive quarter for a variety of reasons…affordability, lack of supply…making it harder and harder for renters to become homeowners.
Thanks to CNBC as original source material.