The IMN SFR Forum West Pre-Conference Webinar brought together industry leaders to explore the evolving landscape of single-family rental (SFR) and build-to-rent (BTR) investments. Hosted by Steve Glenner, the session featured insights from Brett Moss, Managing Director at Berkadia; Danny Kattan, Founder of Sell2Rent; Dave Piho, Managing Director and Deputy CIO at Bridge Investment Group; John Watt, VP of the Real Estate Investor Division at Unitas Financial Services; and Stuart Gethner, President of Dobson Property Management.
Strategic Transition and Market Dynamics
Transitioning from multifamily to SFR investments requires strategic planning and understanding market dynamics. The panelists highlighted that there are significant nuances between conventional multifamily and SFR/BTR, including leasing velocity, operations, resident retention, and on-site amenities to name a few. These factors tend to favor investors with a longer-term investment horizon over those with a traditional merchant build strategy. Construction and land costs pose significant hurdles in new developments, impacting the feasibility of developing BTR communities. Given these challenges, many investors are opting for forward sale executions (buying homes from a builder as they are completed) or acquiring existing properties as a more attractive option from a risk-adjusted return perspective.
Demographic Shifts and Operational Challenges
Demographics play a crucial role, with the 35-49 age group driving demand in the SFR market, projected to grow four times the national average over the next five years. This shift is creating new opportunities for investors, as this age group increasingly seeks rental options that offer more space and privacy. Managing scattered site portfolios presents unique challenges relative to contiguous communities. There is no one-size-fits-all solution in the industry, which requires owners and operators to tailor operations to specific communities. Having on-site management vs. a hub-and-spoke model requires numerous considerations including product type, unit count, geographic concentrations of operators to handle leasing, maintenance and general day-to day of a community or portfolio of scattered homes.
Insurance Strategies and Exit Options
Rising insurance costs necessitate higher deductibles and proactive risk management. A hands-on approach to maintaining properties is crucial to minimize claims and control expenses, emphasizing the need for strategic insurance planning. Investors have flexible exit strategy options, including portfolio sales, retail sales to owner-occupants, and sales to smaller investors. These strategies provide flexibility and potential for maximizing returns, allowing investors to tailor their approach based on market conditions. Amenities like fenced yards, garages, and the availability of convenient visitor parking are crucial in attracting long-term tenants and enhancing property appeal. These features significantly impact resident retention and satisfaction, making them a key consideration for investors looking to enhance property value.
The IMN SFR Forum West Pre-Conference Webinar provided valuable insights into the current trends and challenges in the SFR and BTR markets. Understanding these dynamics will be key to successful investment strategies. Join us at the IMN SFR Forum in Scottsdale on December 2 to explore these topics further.
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