Build To Rent Insight

17 Replies

Hi BP,

I've been seeing alot of news on massive Build To Rent investment funds and developments. For example, Toll Brothers recently announced a $60 million investment in a joint venture focused on BTR.

I'm wondering if any smaller investors have had experience with this style of investing (SFRs and smaller multifamily?). I'd love to hear your experiences & opinions. 

@James LePage I'm a little late to the party on this thread, sorry about that.  I have a lot of experience doing build to rent on smaller multi family.  It's my entire business model, infact.  I'd be happy to chat about it sometime if you're still looking into that.  There are a lot of things to watch out for, but it can be a very successful strategy.  Especially in taking advantage of year one bonus depreciation. 

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@James LePage There are two main publicly traded companies that build to rent. American Homes 4 Rent (ticker: AMH) and Invitation Homes (ticker: INVH). You can learn a lot about the space by going to the "Investors" page on their websites and reading through annual reports and investor presentations. Hope that's helpful.

@Steve Olson Hi, I'm in the process of putting a plan for my development partners together on B2R, it will be on a smaller scale here in Houston TX. I would like some guidance from your experience.

Originally posted by @Demetrius Mathis:

@Steve Olson I’m looking into doing that here in the Jackson Mississippi market . Would love some insight

be tough in Jackson when existing rental stock will sell for less than what it cost you to build new.. it worked there

with the go zone tax bene's but that was as you know LOOONG time ago.. 

@Hector Canales and @Demetrius Mathis thanks for reaching out. Shoot me an email and I'd be happy to discuss.  @Jay Hinrichs does have a point about Jackson though.  Approaching this from a "compared to what" standpoint, it'll be tough to bring product to market at a price that makes a lot of sense.  Believe it or not, this can be a problem in the Houston metro too...but it all depends on which sub market you're in.  Some submarkets are very expensive...some still trade for at or below replacement cost. 

@Jay Hinrichs Thanks but the inventory is getting low with the funds scooping it up.So much competition now with wholesalers flooding the market. I’m thinking it may work as the cost to build is cheaper than other markets . Thanks for any input

Originally posted by @Demetrius Mathis:

@Steve Olson I’m looking into doing that here in the Jackson Mississippi market . Would love some insight

I would agree with Jay. In Jackson it is better to buy existing property and fix it up. 

@Demetrius Mathis maybe if you can find the right contractor (a friend, a cousin lol) but I just ran the numbers for a "build to rent" (duplex) in Hattiesburg Ms just south of you and price to build was quoted at 110-120/sqft and that's not even considering moderate to high end material. To just hit the 1% rule I would need 100/sqft or less and would want at least quartz countertops not formica as just like you I'm targeting a diff kind of tenant. Prices to build seem high right now in South Ms compared to before. I'm guessing due to low mortgage interest rates and more builds therefor driving demand up for new construction. If you can find the right contractor or are ok with less than 1% rule you can probably get it done. Good luck and let us know how it goes! 

Learned about this in the Wall Street Journal article today "Build-to-Rent Home Construction Booms". Curious to see what returns they are forecasting when they build and manage the properties and investors are just supplying the funds.  I sent some inquire emails and see what comes of it.