At Guardian, Cisterna is focusing on two versions of build-to-rent: model home leasebacks and building entire subdivisions or significant portions of subdivisions solely as rentals. The model home leasebacks get him in the door with builders, at which point he can inquire about subdivisions that may make sense for larger-scale build-to-rent. “Builders are willing to sell properties in bulk at a discount as it eliminates sale and marketing costs from their budget, and the faster absorption can increase their project-level IRRs (internal rate of returns),” he said. “Me potentially buying an entire subdivision … they can redeploy

their capital faster, which is music to their ears.”

where a substantial portion of new homes with 1,000 to 2,000 square feet are selling under $250,000 a unit. “As long as you can see there is an inkling of that product out there, there is probably land out there for it,” he said, noting that many builders overlook build-to-rent opportunities because they are focused on selling high-priced homes to well-heeled buyers. But he argued that tight lending is driving up rental demand for the lower-priced homes, allowing those new construction rentals to pencil. “It takes a maybe site or a dormant site and turns it into a green light … homebuilders are not thinking of it the way that SFR investors are.” Among 59 metropolitan statistical areas with at least 500 new home sales so far in 2018, there were 22 with median new home sales prices below $250,000, led by Little Rock, Arkansas ($134,100); Louisville, Kentucky ($145,200); St. Louis, Missouri ($153,750); Indianapolis,

Cisterna provided as example a recent deal in which Guardian acquired 56 lots in the Orlando, Florida, metro area. He expects the units will be built for an all- in cost of $200,000 each and will rent for as much as $2,000 a month. “A gross yield that is 12 for new product … a cap rate between 7 and half and 9 percent,” he concluded. “When I compare that to what’s out there … where I don’t have to do the heavy lifting, that sounds great.”

Cisterna targets markets with a strong local economy and housing market

“I believe purchasing newly built properties in bulk is the most efficient way to scale the business, as I have seen firsthand how resource-intensive it is to acquire, renovate, and manage properties on an individual basis.”


A BUILD-TO-RENT DEAL IN ORLANDO • 56 lots in southwest Orlando • $200,000 per unit all-in cost to build • $2,000 a month rent

• Estimated Gross Annual Yield: 12% • Estimated Cap Rate: 7.5% to 9%

Source: Dennis Cisterna



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