The Fund That Flip team recently returned from the IMN Single-Family Rental Investment Forum (East) in Miami, Florida, where investors, developers and key business providers in the single-family rental space discussed trends and strategies influencing the rental market. Check out the post below for our top takeaways from the conference, including the state of the real estate market, demographic trends, and more.
CEO Matt Rodak moderating a panel on debt financing sources at IMN Single-Family Rental Investment Forum.
Housing prices are still going up. Okay, this one probably isn’t a revelation, since we’ve seen this trend month over month across the US. The tight housing supply is a holdover from the slowdown of new construction after the 2008 financial crisis. This coupled with an increase in the volume of renters and overall demand for rental housing are reasons we haven't seen any slowdown in the cost of housing or the expansion of the rental market.
Build-to-rent is becoming increasingly popular. Because of low housing stock and rising prices, investors are building single-family homes with the intention of renting them out. Although historically eschewed due to higher construction costs and lower yields, build-to-rent is now a desirable strategy for many investors, providing them high equity and cash flow. Moreover, access to more affordable capital means investors have more leverage to incorporate strategies like build-to-rent into their portfolio strategy. While it can be difficult to source the land for the construction of single-family rental, these SFRs are new constructions with low maintenance and modern features and thus very attractive to the growing rental market.
Millennials are driving the single-family rental market. We’ve known for years that millennials are struggling to afford housing, let alone own a home. The skyrocketing cost of college tuition and medical care, which have outpaced income growth in the past 30 years, means millennials have inundated the rental market in recent years. Yet as this generation starts to have families of their own, many are looking for the space of a single-family home without the obligation of a mortgage, which has resulted in expansion of the single-family rental market. One refrain we heard often during the conference is that investors are increasingly focusing on millennials’ tastes and preferences in the design, location and marketing of their new builds.
While these are just three major trends we gathered from the conference, it’s clear there are many factors influencing the growing single-family rental market. We believe these macrotrends will continue to shape the industry and are excited to see the new opportunities it will bring to our business!
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