Prior to being the Sales Manager here at Point Acquisitions, I spent time in a large corporation. This is my first time attending the IMN Single Family Rental Forum with Point and I wanted to share my thoughts from the conference from a beginner’s view as well as my key takeaways.
In the months leading up to the IMN conference in Scottsdale AZ, the term “Single Family Rental” meant one thing to me. A Single. Family. Rental. But is that something a lot of people do, just own one or two rental properties? Not at this conference. The minimum property holdings per attendee was at least 25 houses.
This conference highlighted this up and coming asset class of 100 to 1000 plus single family rentals owned by real estate developers, institutional investors and owner/operators. This seemed to be the push back from the crazy run in the multi-family market and the lack of profitable opportunities in that asset class. It’s become a key asset class for capital preservation among wealth managers.
The Single Family Rental
Nowhere in my mind was the idea that entire developments or communities are built or designed with this sole purpose. I was baffled to find out this is a new institutional asset class for real estate.
Low and behold, here I am months later watching a panel of five investors discussing their best practices and strategies for building entire communities of 50+ homes, from ground-up development, for the entire purpose of renting out to families or millenials. Some of the world’s biggest hedge funds are in this asset class, ie: Cerberus, and they are buying and building at a rapid pace. And, they are not building the communities to sell the homes to families, they are building them specifically to rent these properties out.
I listened to the way these deals are built from inception to finality. The sourcing of the land, the architects and the planning, the financing and development, the maintenance and the management. So many moving parts to control an entire community. It all just seems crazy to me, why not just build these homes and sell them and move on?
Then these investors got into the numbers, and the ways they maximize profits. Who are they planning these communities for? Older retirement type communities (baby boomers)? Young families or millenials?
We were shown how they went about replicating floor plans, gathering wholesale materials, distribution, and economies of scale with labor to get discounted building costs to maximize the bottom line. All the pro tips necessary to hit the ground running were presented at this conference.
In an economy where construction demand far exceeds supply, these brand-new communities create a longer timeline in which maintenance will come due. These communities are built with nicer features to help keep tenants longer term.
Point Acquisitions will again be speaking and moderating panels in the upcoming IMN Single Family Rental Forum (East) in Miami on May 12th – 14th. Come here more about this exciting asset class, it is worth the ticket. Note, we will be handing out comped tickets to select clients and qualified owner/operators – please contact: [email protected]
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