Words that Work WP Cover

Insights from IMN: SFR East Pt. 2

Read below for the remaining notes from the Single Family Rental Forum (East) that are specific to build-for-rent, and don’t miss out on the recordings from Tyson and Alex’s sessions at the forum!


  • Build-for-rent is the only game in town. 
  • Nationwide 45,000 current BFR in pipeline. There were 27,000 in 2023. There were 7000 in 2020.
  • In BTR communities, think about what do we want to charge them for vs. what do we want to give them for free?
  • Outdoor fenced space and smart home tech is expected in most BFR.
  • Maintenance experience is the number one reason tenants leave BFR.
  • BFR tenants are stickier than multifamily.
  • Leverage lessons learned from BTR pioneers.
  • Prospect pool For BFR overlaps multi and scatter sites.
  • BTR residents often want less onsite people presence. Belief is they want freedom of interaction in their experience. 
  • Adjust what has been pertinent in multifamily and what has been pertinent in SFR to a better product.
  • What is the difference between a value-add and opportunistic fund?
  • One owner is looking to exit to middle to high sevens on yield on cost.
  • Cap exits are high 5’s, low 6’s for some Class A product.
  • Turnover cost projections should escalate: $500 first year, $850 second year, $1000 third year.
  • Consolidation and density of BFR assets can be an issue for insurance companies. 
  • Owners should write a narrative about deals/assets for insurance providers.
  • 2-3% rent growth is always appropriate.
  • Rents are flattening.
  • Buyers are focusing on untrended rents.
  • Getting the pig through the snake, as an analogy for getting through current excess rental inventory absorption to get to a gap that will exist in a couple of years. 
  • A lot of opportunities to buy aged C-class homes at 8, 9, 10 caps.
  • Small investor expense ratios are 40%.
  • Large operator expense ratios are 37/38 %.
  • Large platforms/institution expense ratios are 33/34%
  • Big benefit of blanket insurance policies is to drive costs down.
  • A lot of BFR is looking for a bridge product for 2 years to hope rates get back down in the 5% range.
  • Cannot use HPA on BFR communities you plan on selling based on cash flow.
  • 5-18% rental premium being achieved based on new construction communities compared to new construction scatter sites.
  • For real time comps go to biggest operators BFR, small multifamily.
  • More confidence about the cost of construction having stabilized.
  • Some products which will not be good for retail buyers will also not be good for rentals. 
  • What is core + capital? 
  • On-site, timely maintenance is #1 amenity for BFR.
  • You are buying a stabilized untrended yield on cost. 
  • Apartment data is very good for BFR.
  • BTR more resilient to flat rental growth.
  • Fundamentals of BFR are normalizing.
  • Look at supply coming into any market you are developing.
  • Look at yields that are accretive to debt.
  • Investors in 2021 and 2022 looking at just yields and not market value of their assets. 
  • Put together asymmetry in your investments, cap the downside but stack upside. 
  • Underwriting the choppiness for the next 5 years, supply constraints will make a huge demand.
  • Fundamentals are stronger now than they have been in the past 5 years.

Featured Articles

Multifamily rents spiked in these cities

Multifamily rents continue to spike…

The best States for taxes

Best states for taxes…

I’m a real estate investor: 11 southern cities you should invest in now

11 great markets, including several Auben markets…