HOUSINGNEWS REPORT
THE RISING ‘BIG MIDDLE’ OF SINGLE FAMILY RENTALS
HIGHEST SHARE OF INVESTMENT HOMES
OKLAHOMA CITY, OK KNOXVILLE, TN TULSA, OK LAS VEGAS-HENDERSON-PARADISE, NV RIVERSIDE-SAN BERNARDINO-ONTARIO, CA MEMPHIS, TN-MS-AR CHARLOTTE-CONCORD-GASTONIA, NC-SC SACRAMENTO-ROSEVILLE-ARDEN-ARCADE, CA
32.2%
31.8% 31.8%
29.4%
28.4%
28.0%
26.1%
24.8% 24.8% 24.7%
DETROIT-WARREN-DEARBORN, MI ORLANDO-KISSIMMEE-SANFORD, FL PHEONIX-MESA-SCOTTSDALE, AZ
24.0%
Not everyone is buying into the build- to-rent strategy, however.
“We had two choices: go to other cities or lower our standards. … If you want to buy the less expensive junk there is a provider for you, but it’s not us. We wouldn’t be able to sustain our growth if we didn’t find new markets.”
“I don’t get it to be honest,” said Mark Bloom, owner and broker with NetWorth Realty, a Dallas-based company that helps investors acquire off-market properties. Bloom said in his experience it’s always cheaper to rehab an existing property than building new. “For me if it has an existing structure on it, I’m going to rehab it and rent it. Then I’ll look at tearing it down, when I’m the last house on the block that has not been torn down and replaced with new construction.” The build-to-rent strategy also can be employed in areas of Atlanta without strong demand from homeowners, according to Whitmire. “I can buy lots in areas that I can’t sell homes, but I can rent,” he said, providing as an example neighborhoods south of Atlanta with a higher share of renters. “The local economy may not have enough income or enough credit to buy
CHRIS CLOTHIER PARTNER AND VP OF SALES AND MARKETING, MEMPHIS INVEST
said. “This time around subdivisions will be built in those areas because they can be rented. The capital markets are driving it.” While Whitmire is willing to go into neighborhoods with lower incomes and lower credit scores, regional SFR operator Memphis Invest is intentionally choosing quality over quantity, according to Chris Clothier, partner and VP of sales and marketing with the firm, which specializes in acquiring, rehabbing and selling single family homes as “turnkey” rental
but there is enough income to rent … and I can make a good cash flow.”
Whitmire said many of his projects are infill developments in already established neighborhoods, but that the multiple exit strategies available to him also allow him to buy, develop and build in suburban and rural areas. Quantity versus Quality “The only reason we had new subdivisions with poor demographics during the last housing boom was government policy trying to push homeownership in those areas,” he
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NOVEMBER 2017 | ATTOM DATA SOLUTIONS
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