What is the exit strategy for BTR?

Question

Zachary Ware · Answer

The strategy I see is a long-term hold on these BTR projects. Either the developer is looking for a long-term hold or is selling to an institutional investor looking for a long-term hold.

Dylan Speer · Answer

Yeah they'd be selling to a DST or some bigger player like a BlackRock or an Ares.

Robert Ellis · Answer

I'd like to hear about this too but heard the asme thing in florida

Garrett Finnell · Answer

We're looking for a buyer for all or a section of a discounted BTR community in Oklahoma City. A lot of the institutions we've sold to in the past are on pause with these interest rates. Does anyone know groups that are still buying?

Robert Ellis · Answer

From a development perspective too, a lot of the groups building these are national developers or public firms that build to hold. In our market in Columbus OH it's American Homes for Rent (AMH), Coastal ridge real estate (student housing and apartment buyer), etc.

We are putting our first build to rent community together and the groups we talk to co develop it and bring the capital for a 5 year exit. Some want to hold longer than that.

Trevor Richardson · Answer

BTR for SFRs is still really new, the large rental funds like American Homes really took off with it several years ago. Though it’s more established now it’s a fairly new product/method. If you go back 8 years there was not something like an entire neighborhood of detached homes that were designed to be rented like multifamily.

That said BTR isn't new, in fact every apartment building ever built is essentially BTR. It was “built to rent”. It was not designed for the owner to occupy. Anyone doing MF for SF BTR is going to want to sell it stabilized. The only way they are not going to do that is if they are distressed in some sort of way. Investment properties are sold based on cash flow, if there is not any cash flow it’s really difficult to get a good price or sell at all.

Don-Carlos Moniz · Answer

@David Pointer, most developers engaged in BTR projects have their exit strategy planned before they start. We are working on one now where the builder is wrapping up Phase 2 of 4 and looking to sell.

Before he broke ground, the plan was to start looking for a buyer when transitioning between Phase 2 and 3 since there is a smaller buyer pool. The target investors for this particular development are institutional buyers looking to hold long-term.

BTR is not what I would call a new strategy, but it has gained a lot of attention (investor and otherwise) in the last few years.

As the others have said, the exit strategies would be to sell the whole development to a single investor; break the development into multiple packages, and sell to different investors (think SFR portfolio); or sell to individual investors or retail buyers.

Justin Moy · Answer

There are a few people are looking into.

Sell off the entire package to an institution.

Sell off individual plots to individual owners or investors

Sell off phases at a time.

Hold them.

What is the exit strategy for BTR?

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