Don Walker, managing principal and CFO of John Burns Real Estate Consulting, offers insights on why single-family rental (SFR) home communities should be part of a multifamily portfolio.
Single-family rental homes offer advantages that apartment units do not, explains Walker. Freddie Mac survey data show that 45 percent of renters planning to rent their next home say they would prefer a single-family detached or attached product. One driver of this is space: 11 percent of apartment units have 3+ bedrooms, whereas 65 percent of SFR homes have 3+ bedrooms, offer greater privacy, backyards, and no neighbors above or below.
As the SFR industry continues to grow and evolve, SFR portfolios consist of both existing resale homes as well as new, build-for-rent housing (“BFR”) communities. We believe dedicated BFR communities are a natural addition to a multifamily company’s portfolio of apartment units. The operation of a concentrated BFR development can be very similar to an apartment complex. Furthermore, our market research has found that developers of BFR communities who have approached management, marketing, and maintenance using methods employed by Class A apartment owners have achieved some of the best absorption rates and rent premiums in the space.
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