Emerging Trend: Single Family Rental Developments
Multi-family apartment construction has been the engine in real estate development in South Florida and nationally for the last several years. The South Florida skyline continues to sprout new luxury apartment towers from Miami to Fort Lauderdale to Boca Raton and West Palm Beach. Lenders can’t lend money fast enough for these projects.
At the same time, sale and construction of new homes have declined and institutional investors have purchased more than half a million single-family homes over the last five years for rental purposes. Many of these homes have been purchased directly out of foreclosure though more recently, these homes are being purchased not only pre-foreclosure, but on the open market. Single-family home rentals are increasing as their own asset class.
Lennar Corp, looking at these trends, has opened its first community of single family rental homes in Sparks, Nevada and has plans to construct approximately 20,000 apartments.
Is homeownership, once the American Dream, a thing of the past? Are developers and homebuilders changing their business models? Home builders changing to a rental model must re-evaluate and consider the structure of rental projects and the exit strategies. Developers who are already in the multi-family business need to consider this new customer – the former homeowner who has not rented in many years. What are his needs and how does that change what the developer must offer? How will these changes affect the development plan? Careful planning and documentation will be paramount going forward.