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Built-for-rent home sector set for explosive growth

By Mike Wheatley | September 18, 2021

Millions of dollars is being poured into built-for-rent single-family home construction, and now developers are struggling to obtain land to build on.

A report in Forbes this week revealed that land brokers, who traditionally sell residential parcels to developers and builders planning communities of for sale homes, are now seeing a much bigger share of land earmarked for rental single-family communities.

Greg Vogel, CEO of Land Advisors, one of the largest land brokers in the U.S., told Forbes that the percentage of sales to the build-for-rent sector is likely to double or triple in the next two years.

The reason for the growth is profit, experts say. With rents across the U.S. rising fast, the yield from rental homes is so great that investors in the sector are increasingly able to outbid traditional home builders for some parcels of land. Single-family rents have jumped by an average of 7% to 10% in the past 12 months in many parts of the country.

Rentals are in demand too. Like homeowners, renters are prioritizing more space and home comforts over things like convenience since the COVID-19 pandemic began. They’re increasingly looking for rental homes outside of city centers.

The greatest demand is being seen for land parcels for rental townhomes, Forbes reported. The rush has been keenly felt in areas such as Augusta and Savanna, Georgia;, San Antonio, Texas;, St. Paul, Minnesota;, and in smaller cities such as St. Cloud, Pensacola and Port Charlotte, Florida.

Brad Hunter, an economist with Hunter Housing Economics, told Forbes the potential for growth in the build-to-rent sector is “enormous”. He said developers are increasingly aware of the underserved demand for such homes, plus the presence of growth drivers such as increased household formation and soaring home prices.

Mike Wheatley is the senior editor at Realty Biz News. Got a real estate related news article you wish to share, contact Mike at [email protected].
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