Investors are pouring in millions to create more built-for-rent single-family communities. It’s fueling a land rush to find open land.
“Land brokers dealing in residential parcels traditionally sell to developers and builders who are planning communities in which people buy homes,” Forbes.com reported. “Now, they are starting to see a growing share who are buying land to build rental single-family communities.”
Greg Vogel, who runs Land Advisors, one of the largest land companies, told Forbes.com he expects the percentage of land sales in the built-for-rent sector to double or triple over the next couple of years.
The rental yields are even allowing built-for-rent investors to start outbidding home builders for land. Single-family rents have climbed 7% to 10% over the past 12 months in many areas.
Since the pandemic, renters are showing a desire for more space and the comforts of single-family living.
Land parcels for rental townhomes are the highest in demand, Forbes.com reports. The built-for-rent land rush is particularly climbing in areas like Augusta and Savannah, Ga.; San Antonio, Texas; St. Paul, Minn.; and smaller cities in Florida like St. Cloud, Pensacola, and Port Charlotte.
“The potential for growth is enormous,” Brad Hunter, a housing economist for Hunter Housing Economics that focuses on the BFR sector, said on Forbes.com. Developers in the built-for-rent space are realizing the underserved demand and the numerous drivers of growth, like rising household formation and skyrocketing home prices, that will lead to a long-lasting desire for built-for-rent single-family homes.