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I read an interesting Costar article recently, which affirms what we’ve been seeing in the marketplace and confirms our strategy at Rental demand is higher than ever, and the proportion of renters is continuing to increase. Why?

If you’re trying to buy a home right now, or know someone who is, you’re experiencing this acutely. Homes in most markets are receiving multiple offers within hours of listing, and many are selling for well over the appraised value, with buyers bringing cash to the close to make up the difference.

Many are opting out of this competitive market, electing to rent until things cool down, which is driving the demand for rentals. Most major markets are experiencing an under supply of rental units, and that’s only exacerbated as single-family home prices increase. But apartments aren’t a great fit for everyone—large families, multiple members of the household working from home, people wanting more space, privacy, etc. Institutional investors are capitalizing on this trend.

An excerpt from the Costar article…

Early this year, JLL capital markets launched a new group that specializes in single-family rental homes, investment sales, and financing. Walker & Dunlop also formed a dedicated team to service the rapidly expanding single-family rental and build-to-rent markets. Last month, fast-growing Sun Belt real estate services firm RangeWater Real Estate appointed a veteran property management executive with the company to lead its new single-family platform. RangeWater is developing single-family build-to-rent projects from Georgia to Colorado. 

Historically, mom-and-pop owners dominated ownership of single-family rental units, but that has changed dramatically as institutional investors including Blackstone started eyeing the industry. Blackstone, which sold the last of its shares in Invitation Homes in late 2019 after taking it public in 2017, reentered the single-family rental market last summer with a $300 million investment in Tricon Residential, a rental housing company focused on the middle market in the United States and Canada.

Another firm, Crescent Communities, has identified several of our favorite markets as key locations for their build-to-rent portfolio. 

“The marketplace will continue to evolve and build,” Natwick said. “We believe that there is enough demand for everyone, particularly in the Sun Belt growth markets.” 

And that’s where Crescent Communities plans to develop its first single-family rental homes. Its team has identified Charlotte and Raleigh, North Carolina; Charleston, South Carolina; and Atlanta, Georgia, as its first four markets for the venture. The single-family rental projects it develops in these cities will contain approximately 100 to 200 residences, with a combination of three- and four-bedroom townhouses and/or detached single-family houses, according to the firm.

Here’s something else to consider; as home prices increase across the country, they become less appealing to individual investors looking to build a residential rental portfolio—the numbers just don’t work. Rents for single-family homes are increasing, but not nearly pacing with the price increases. If you were ever invested in single-family homes, you may remember the 2% rule— your monthly gross rent should be equivalent to 2% of the purchase price of the property. I did a quick Zillow search in the Raleigh market and found a home that sold for $400,000 on 4/20/21 and is now listed for rent at $1,900 per month. That’s the .047% rule! Not an appealing investment.

So, what are the implications for us? An astute investor such as you will do some back of the napkin math and opt-out of single-family homes as a viable, scalable, wealth-building strategy. That capital will most likely increasingly flow into multifamily assets, just like the ones we’re acquiring. And, as more people are sitting on the sidelines, demand for apartments will continue to increase. The build-to-rent firms will satisfy a very small portion of the demand in these key markets. 100-200 rental homes will be absorbed almost instantaneously, and at much higher rents than apartments. 

While we can never predict the future, these trends in the residential and commercial multifamily market point to strong and increasing demand for exactly the product we’re providing.

If you’d like a copy of the full article, send me a note at and I’ll be happy to send it your way.