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  • Investors are entering the single family home market, buying homes to rent them out.
  • Demand for rent houses is now inspiring developers to build entire communities from scratch.
  • The Wall Street Journal reports that suburban rental developments are underway in nearly 30 states.

It’s no secret that investors big and small are buy individual houses and rent them out tenants who want all the benefits of a home without having to own one.

After a record buying spree in 2020, the trend is intensifying with institutional buyers pick up nearly 55,000 homes during the first quarter of 2021, according to data from Redfin.

And in March, the largest operator, Invitation Homes, told investors it planned to spend $ 1 billion in home purchases this year.

But a growing wave of developers are tapping into this demand by creating whole new rental housing communities that are rented and managed as large, horizontal apartment complexes.

A developer, Transcendent Investment Management, started in 2014 and now manages over a million square feet of single family homes.

“We decided to no longer buy older products, but to partner with home builders and be a wholesale buyer of new homes,” CEO Jordan Kavana told Insider.

Today, nearly 30 states are home to such developments outside of cities like Phoenix, Nashville, and Atlanta, according to the Wall Street Journal,

“We didn’t want to own property,” Arizona community resident Joe Paul told The Journal. “We always want to travel and don’t want to have to maintain a house.”

Offering professional property management, routine maintenance and repairs that are the responsibility of the landlord, not the tenant, the new developments offer a kind of bloated version of the homeowners association model that some communities already have.

Plus, some tenants have gone from owner to renter – and welcome the flexibility of mortgage-free living.

Matt Marooney, who rents a five-bedroom house in a Georgia community, told the Journal that he previously owned a house and that the rental has helped him get back on his feet financially. He would like to become the owner again, but not right away.

Institutional ownership of single-family rental properties has been the subject of much criticism, but analyst Brad Hunter told the Journal that homes built to rent account for about 6% of all new homes, but could soon approach 50% as they grow older. as demand increases for more flexibility lodging.

Homeownership has traditionally been the most important factor in building household wealth in the United States, but this equity does not increase when rent is paid.

“We need to think more about the different ways that people can still own the communities they live in, outside of the primary residence model,” said Christopher Ptomey, executive director of the Terwilliger Center for Housing at the Urban Land Institute, according to the newspaper.

Ptomey suggested several alternatives that could offer the economic benefits of traditional mortgage-free property, such as the neighborhood scale. immovable investment trusts or other models of fractional ownership.

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