Last week, we touched on the many benefits that new construction has to offer when building better dividend yields for investors who have chosen to diversify with the Peak Housing REIT. However, the points we touched on are not the only benefits of build-for-rent communities when it comes to your income from passive real estate investing!
In today's article, we want to start rounding out the information we've provided on build-for-rent as a core component of our growth approach for the Peak Housing REIT by juxtaposing it to how many other equity REITs within the rental market operate. The importance of this comparison lies in pointing out the differences across returns.
The top seven performers in a flagging industry according to a U.S. News analysis were as follows:
- UDR, Inc. (UDR)
- Camden Property Trust (CPT)
- Independence Realty Trust (IRT)
- American Campus Communities (ACC)
- Equity Residential Properties Trust (EQR)
- Mid-America Apartment Communities (MAA)
- Apartment Investment and Management Company (AIV).
Their respective dividend yields were (at the time this article was written):
- UDR: 3.58%
- CPT: 3.34%
- IRT: 4.60%
- ACC: 4.58%
- EQR: 3.93%
- MAA: 3.20%
- AIV: 4.32%
For comparison, the Peak Housing REIT is currently projecting 6% returns with the properties within our portfolio; this number is expected to grow to 8% as we continue to build new communities for rent in the DFW area and across North Texas.
With the exception of Mid-America Apartment Communities (which sources properties across markets in California, Florida, and Texas), all of these 'top-performing REITs' saw their last quarterly earnings fall or stagnate. At the time the report was written, MAA was yielding returns of 3.6% and has since slid to 3.2%. What happened?
We Target the Growing Demand for Reduced Crowding
All of the public equity REITs listed above are the 'champions' of the multi-family housing market (specifically, apartment units). These publicly-traded REITs are now facing a serious uphill battle even in well-performing markets like Texas as their two largest market demographics begin seeking a shift away from crowded apartment living. We're referring to millennial renters and Generation Z.
In a report conducted by Apartment List, At least one-fifth of millennial renters in major metropolitan areas like San Francisco expect to 'rent forever' as homeownership remains out of reach. Additionally, almost half of all millennial renters lack the necessary capital to save up the down payment required to transition from renting to homeownership.
Despite this, demand for more space and housing they can afford has yet to diminish. However, traditional homes are not being built to satisfy the price point at which millennial renters are seeking their first home, and many millennials are still wary of the potential 'trap' that owning property can become after the impact of the Great Recession.
Likewise, Generation Z places a high value on work-life balance and the connective benefits of a community atmosphere, both of which are becoming increasingly challenging to find as working from home becomes less of a trend and more of a standard.
At The Peak Group, we engineer build-for-rent communities that meet the demands of age groups that have been traditionally forced out of single-family homes and townhome living—and that demand is only expected to increase. COVID-19 inflamed a housing dynamic that was already in motion as millennials began forming families of their own and found that apartment living no longer met their needs.
We Build Beautiful, High-Quality Homes
- Our build-for-rent communities feature spacious, open floor plans with stainless steel appliances and granite countertops.
- We also incorporate smart home technology into our builds to appeal to renters across all age groups. These are typically B+ to A- builds that appeal to the modern renter's lifestyle.
- Build-for-rent communities allow these age groups to raise their family or enjoy the benefits of community living without the financial or emotional roadblocks that homeownership now represents.
What's the takeaway from all this? The reality is that we meet the needs of an underserved population of renters with our builds here at The Peak Group, and this has allowed us to get ahead of a growing desire to leave apartment living behind. We tap into the benefits of this foresight to produce higher dividend yields for our investors that outclass and outperform other housing REITs.
This Shift in Housing Isn't a Trend
As we touched on previously, this change in housing tastes isn't simply a result of the pressures of COVID-19—even though the pandemic has greatly accelerated a lifestyle change that was already on the rise among the largest population of renters nationwide.
Staying alert to these developments has allowed us to complete one successful build-for-rent community already—with more on the horizon. As an investor, you have the opportunity to join us on this journey—and enjoy the many benefits it has to offer to your long-term financial goals and planning.
If you're interested in learning more, start with a visit to our FAQ page, then reach out to us if you have further queries. We're always eager to help investors experience the benefits of truly passive real estate investing.
Posted by The Peak Group on December 24, 2020