In his movie “Annie Hall,” Woody Allen recounts an old joke in which one woman asks another about a restaurant, and the other woman says “nobody goes there anymore; it’s too crowded.” In a similar way, some real estate investors are pausing their built-for-rent (”BFR” or “BTR”) projects, because they fear that it is about to become too crowded. This concern is justified in certain submarkets around the country, such as an area west of Phoenix, where there are seven built-f0r-rent cottage developments along a single 1.5 mile stretch of road. In most parts of the country, however, new supply is still falling far short of the demand for these kinds of rentals. Now it looks like some of the sidelined capital is about to resume investment activity in this space.
We define built-for-rent single-family housing as including the following purpose-built rental types: single-family homes built on individual lots, townhomes, duplexes and quads, and cottages developed on a single plat of land (sometimes called “horizontal apartments”).
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