Build to Rent

Mike: Welcome back to the flipnerd.com REI Classroom where experts from across the real estate investing industry teach you quick lessons to take your business to the next level. And now, let’s meet today’s expert host.
Adam: Hi. My name’s Adam Stern. I’m President of OwnAmerica, the best single family trading platform on the internet today. I’m the host of your REI Classroom. Thanks for being with us. I thought I’d talk a little bit today about build-to-rent.
Mike: This REI Classroom real estate lesson is sponsored by theinvestormachine.com, FlipNerd’s private investor coaching program and your blueprint to investing success.
Adam: We’ve seen here at OwnAmerica, being that we’re in the business of selling single family rental property portfolios, a big push by owners who bought lots and land during the downturn and have built these stock piles of land or finished lots. And now that the real estate market has rebounded and housing prices are up, they’re building full communities for the express purpose of renting them out and a lot of them keep them but a lot of them build these build-to-rent communities to sell. And there’s a lot of thought as to whether or not build-to-rent is better than buying them scattered site. I’ll just expound on some of the proponents of build-to-rent.
Operating efficiencies tend to be a big reason why people say they like build-to-rent portfolios. The idea that you can have 20, 30, 40, 50, 100 homes that are all rented in a single subdivision or multiple subdivisions, it brings the ability for you to mange those properties within an operating budget that’s lower than if you own properties that were located all throughout a market. Because you could have less property managers, you could have a more consolidated management team, and maintenance team, and that tends to drive down expenses.
The kind of tenants you could attract, some proponents of it say it can be a big advantage like the idea that if you have different kinds of properties in a subdivision. A family that moves in that has a smaller family at the offset maybe has no kids, rents a single family rental property and says, “I like the school district. I like the neighborhood. I like my neighbors for the most part, and I know when I have a kid or two, or three, or four,” like I do, they can move to another property in that neighborhood, pay a little more rent but have a bigger place while keeping their family, their kids in school, and their neighbors and their friends intact.
This is kind of a deviation from the standard strategy which is to go out there and acquire properties that are already stabilized wherever they might be in a confined geographic area.
A lot of the portfolios that we see, or a lot of the portfolio buyers that we see are doing that. But more and more as inventory gets scarce and new build-to-rent portfolios come online, they’re looking toward that for all those reasons and we’re finding more and more inventory coming up right now. We have a build-to-rent portfolio in Jacksonville, for example. A guy that owns a lot of portfolio, a big portfolio of properties down there, just decided to build build-to-rent. Another one in Dallas. I expect in 2017 we’re going to see a lot more of this kind of product coming online and as we do you can always find it at ownamerica.com or give us a call at OwnAmerica. We’re happy to talk to you about it. Appreciate you watching. Thanks a lot.
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