Every year, Information Management Network (IMN) hosts dozens of conferences focusing on real estate in venues across the country. Recently, IMN hosted their 8th Annual Build to Rent, Land & Homebuilding Forum in Nashville, TN. Two members of Catalyst Capital Partners’ leadership team attended the conference: Managing Partner Brian Ford and Chief Investment Officer Ted Hill. Ted was one of the speakers at the forum, participating in a panel about joint ventures between real estate development firms and home building companies.
IMN’s conference was a great opportunity for us to learn more about the fast-growing build-to-rent industry, which we have been active in since 2018 with the development of our first build-to-rent townhome community, Wayford at Concord. Additionally, we are currently underway on another build-to-rent development, Wayford at Innovation Park, which is located in Charlotte’s burgeoning University City submarket.
Continue reading to learn some of our key takeaways about the current state of the build-to-rent industry, and what that industry may look like in the near future.
Current Trends in Build-to-Rent Development
- Institutionalization – Historically, rental homes have most often been owned and operated by private owners. More recently, larger institutions have been moving into the build-to-rent space. Today, rental homes are most commonly owned and operated by companies rather than individuals. This shift in ownership of build-to-rent developments has presented many new investment opportunities in the market. Rather than purchasing and renting out single-family homes, real estate development companies such as Catalyst are building entire communities of single-family homes and townhomes from the ground up for the purpose of operating as one cohesive rental neighborhood.
- Debt & Equity – In the current build-to-rent market, equity is more readily available than debt. Acquiring the debt necessary to finance the construction of rental homes is currently one of the biggest obstacles to build-to-rent development. Extreme rate hikes have rendered many new developments unviable. Equity groups, meanwhile, are eager to deploy capital in the B2R space but are struggling to find opportunities with enough yield. Currently, most equity groups are gravitating toward larger markets, more desirable locations, and higher-quality developments.
- Parking, Storage & Utilities – Some of the biggest concerns shared among renters are parking availability, storage space, and waste management. It is more difficult to create these amenities in build-to-rent developments, as they are more costly and challenging to program into community. A lack of parking space has been a complaint from many renters in B2R developments. Ineffective waste management practices are also likely to upset renters. To better accommodate tenants’ needs, build-to-rent developers should work to create enough space for the storage of vehicles and other belongings, as well as implementing effective waste management solutions.
- Innovative Technology – Incorporating innovative technology into build-to-rent homes can help developers to appeal to renters while also reducing maintenance costs. Smart thermostats, for example, are a convenient solution which allow easy client control for tenants while renting a unit and for property managers when a unit is vacant. Water leak detection systems are another innovation which can save property managers money, allowing them to detect leaks before substantial water damage occurs within rental homes. With the rise in popularity of electric vehicles, installing EV charging stations in B2R communities will create a draw for many renters.
- Self-Guided & Virtual Tours – An innovation which build-to-rent property managers would be wise to take advantage of is the implementation of self-guided and virtual tours for prospective renters. Research has shown that 45% of renters desire tours outside of normal leasing office hours. It has also been found that younger generations of renters prefer to view properties privately. Allowing renters to schedule a self-guided tour or a virtual tour at a time that is convenient for them will increase leasing velocity. Doing so will also significantly reduce costs for owner-operators by removing the need for on-duty staff to guide tours for tenants.
Partner With Catalyst for Build-to-Rent Investment Opportunities
If you’re interested in investing in a build-to-rent development in North Carolina, South Carolina or Tennessee, we’d love to hear from you. Connect with Catalyst Capital Partners today if you’d like to learn more about opportunities for investment in build-to-rent development in the Southeastern United States!