2021 was a record year for the Build 2 Rent sector gaining momentum among investors and seen as an opportunity and alternative among renters with about 78% of renters interested in living in SFR communities according to a study conducted by Rent Café
Many different factors are contributing to this momentum among renters
- Homes are at an all time high
- US Market value of homes increased by more than 19% in 2021 according to Zillow statistics due to an all-time high construction material price, labor shortage in the construction industry, supply chain issues, all time high inflation, mass migration to certain states such as Florida and much more
- Single families being a possible alternative to multifamily
- The development of remote working has led many people to needing a bigger accommodation with spaces such as an office dense space
- B2R single families have the possibilities to offer bigger accommodations such as a garage or a garden space
- This trend is predicted to stay since the majority of workers are looking to keep working remotely either part time through a hybrid schedule or full time according to several studies
- Student debts among millennials
- Student loan debt has kept 35% of millennial borrowers from purchasing a home, according to a survey conducted from the National Association of Realtors
The build 2 rent properties which makes up around 5% of properties nationally has also shown growing momentum among both private and institutional investors.
Investors see many benefits to this concept such as
- Single Family Rent Growth
Due to the lack and increasing demand of housing, singe family rents have increase by 10.2% YoY in September, the fastest year-over-year increase in over 16 years, according to the CoreLogic Single-Family Rent Index (SFRI)
- Budget for all type of investors
Single-Family have an easy entry point, many developers such as the Realty Doctors are offering investment opportunities starting in the 200’s usd which can be an attractive investment for private investors looking at investment diversification and take advantage of tax advantage of real estate. It can also be an attractive investment opportunity for private equity firms and institutional funds, as an example Christopher Todd Communities, one of the nation’s leading innovators in the Build To Rent housing segment sold one of its 313-home community located in Phoenix, Arizona.
- New, always works out better
B2R single families are brand new, newer tends to benefit better from long term appreciation despite being at a higher price point. A non-negligible factor is that often times new equipment such as AC, dishwashers… are often insured for a certain period of years which reduces the risk of unplanned expenses.
All this leads us to think that B2R single-family investments is a sector in which investors should be close attention.
Written by Tugdual Chitrit
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