Build-to-Rent Popularity Spikes
Since the Pandemic hit our nation, people have been told to stay six feet apart from friends and family, work from home, and keep your distance. Individuals who lacked enough space or lived within highly dense cities have now looked towards the suburbs for more square footage, privacy, and a designated work-from-home space. However, as of January 2022, asking multifamily rents have increased by 15% and mortgage payments have also increased by 3% since December 2021.1 This has left many people with the inability to purchase or rent a home to achieve this desire for space and privacy.
As stated by Redfin Chief Economist Daryl Fairweather, “Moving right now is expensive, whether you’re renting or buying. One of the only ways to avoid high housing costs is to move somewhere cheaper, but the list of places that are truly inexpensive is shrinking. Rising mortgage rates are squeezing more Americans out of their for-sale market, which will likely put increasing pressure on rents in the coming months.”1 This concern has fast tracked a relatively new branch in the build-to-rent (BTR) asset class and is promising growth in the next coming years.
BTR real estate mainly consisted of investors purchasing property then turning it into a rental investment. Now, this asset class has expanded, allowing homebuilders and investment firms to partner together, building new single-family homes from the ground up with the sole intention of renting these properties out to tenants. The result being “sustainable demand and positive cash flow”2.
Alexandra Ciuntu, from RentCafe recently stated that “It’s easy to see the appeal of built-to-rent homes; the trend combines the financial and leasing flexibility of a rental with the amenities and convenience of a professionally managed property, all while living a single-family home lifestyle. As a result, everyone is interested.”3
Paradyme constantly has its thumb on the pulse of the market, which is why they continue to foresee the data driving the demand of these types of communities. The BTR supply is expected to double within the year of 2022, which is trending to be the hottest on record.3
That being said, Paradyme has recently acquired 43 acres of land in Clarksville, TN following their expansion to the booming state, and is currently in the planning stages of building 60 apartments, 50 town homes, and 40 single family homes with the build-to-rent concept in mind.
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Fahey, A. (2022, January 24). Build-to-rent on track to see 14k units deliver this year. What happens next? Retrieved from The Business Journals: https://www.bizjournals.com/bizjournals/news/2022/01/24/build-to-rent-sector-whats-next.html#:~:text=The%20buzzy%20build%2Dto%2Drent,build%2Dto%2Drent%20homes. Pollack, L. (2022, January 21). 2022 Will Be Hottest On Record For Build-To-Rent. Retrieved from Globe Street: https://www.globest.com/2022/01/21/2022-will-be-hottest-on-record-for-build-to-rent/?slreturn=20220122131421 Pollack, L. (2022, February 22). Asking Multifamily Rents Rose 15% in January. Retrieved from Globe Street: https://www.globest.com/2022/02/22/asking-multifamily-rents-rose-15-in-january/?kw=Asking%20Multifamily%20Rents%20Rose%2015%25%20in%20January&utm_source=email&utm_medium=enl&utm_campaign=multifamilyalert&utm_content=20220222&utm_term=rem