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Updated 3 months ago on . Most recent reply

is build to rent a viable strategy outside of 4-5 states?
Build to rent (BTR) is still one of the smallest part of the new construction market. Less than 10% of all new single family home deliveries. Where does it fit in the market?
I spoke to one of the larger land entitlement firms in the country who's working on 18 projects at once that represent more than 2500 housing units. A representative who has more than 35 years of experience in land entitlement. His opinion? Build to rent developers are paying less for tracts of land than single family home builders on the horizontal entitlement side and he doesn't entitle for build to rent. That's one supply limitation. What large developers can pay for land drives horizontal development trends nationally.
A second recent conversation I had with one of the larger build to rent developers revolved around single family home rentals. They like to be in markets where a 3 bedroom starts at $2600 per month. There are parts of Columbus where we are heavily involved in ground up construction and land entitlement that you can hit that number but not even 80% of the market pays that on a rental.
We got to talking and in reality he said the rental numbers they need per square foot is around $1.70 per square foot. You can get that in our market but you need to rent apartments not single family homes. He also mentioned they are really only focused in Florida and the coastal Carolinas where they can get those rents. He said even texas he couldn't get those numbers.
That begs the question, does build to rent have a place in the market? From my talks with national developers and national land entitlement firms there are limited markets and if they are paying less for land it's not a target for ours.
Personally, more than likely we won't be entitling large tracts of land for build to rent. I've heard the same feedback over and over but would love some additional commentary and comments. What do you think about build to rent? Where are the numbers working on a national basis? Detached single family homes and apartments are being built in almost every market but I don't see build to rent in every market.
In our other development market in Miami you could never get the land for build to rent to work.
- Robert Ellis
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