Build-To-Rent Communities Emerging as Housing’s Next Great Niche

The single-family home rental business has been around for years. Lately, it has been gaining momentum as institutional players and multifamily companies enter into a market that some say is providing a great opportunity for income for its long-term holders. Lee Bradford, President of Property Management, DHI Communities, a division of D.R. Horton, Dallas; and Darren Williams, President, Portico Property Management, Dallas; joined a panel during RealPage’s RealWorld Conference in Las Vegas in July led by Jay Parsons, Chief Economist and Head of Industry Principals, to discuss investment, management and development trends. Single-family rentals (SFR) and build-to-rent (BTR) communities are similar, but it’s the BTR model that is grabbing today’s headlines. SFR took hold during the Great Recession a decade ago when foreclosures led to cheap homes that were purchased en masse by institutional players on an individual basis. Today, developers are creating neighborhood communities that include dozens, if not hundreds, of homes in selective markets, playing to those who might prefer more living space and a yard compared to traditional apartment living or who can’t afford or choose not to invest in single-family homeownership. SFRs Seeing 30% More Online Traffic Williams said the public needs to be educated about SFRs’ definition. “As an industry, SFR-BTR is not ubiquitous,” he said. “There’s a newness factor to all of this that helps to generate attention. On our website, we’re seeing 30 percent more traffic to our SFRs than our apartments – this could just be a curiosity thing. Our pitch is: Come check us out as another option in your search.” He said he’s seeing a roughly $600 premium to the upside in rents between single-family rentals and comparable apartment homes. “We don’t expect that to continue, and the more of this type of product delivered that gap should shrink,&...