At The Peak Group, wholesale acquisitions of future rental properties and cash infusions aren't the only way we acquire high-performing investments for the Peak Housing REIT. We also add considerable value to the portfolio using newly-built properties spearheaded by our vertically-integrated, in-house construction branch under the Peak Construction Group.
Given that build-for-rent is a significant component of our acquisitions strategy here at The Peak Group, it's only natural that the investors we serve (and invest alongside) may be interested to learn more about the incredible profit potential of build-for-rent communities. Typically, this approach is out of reach for 'small-scale investors,' even if you built a substantial portfolio prior to your transition to the Peak Housing REIT.
Today we'll cover the build-for-rent approach in-depth, with a bit more detail into how it is a crucial component of successful REIT investing strategies for large-scale operations like the Peak Housing REIT.
The History of Build-for-Rent Communities
Build-for-rent properties are a fairly recent player in the real estate market and emerged as both a response to and byproduct of the Great Recession.
Originally, investors seeking housing opportunities were faced with a glut of distressed single-family homes and foreclosures during the peak of the Great Recession. If you can imagine (or even remember) what home sales were like back in early 2009, almost 50% of those sales were foreclosure properties that were fueling the portfolios of investors with ready capital.
Fast forward to 2019, ten years later, and that number had fallen to just 2% of home sales. Essentially, the 'gold rush' of distressed properties that fueled large-scale wholesaling efforts had slowed to a trickle, and institutional investors looking for growth were on the hunt for their next big ticket.
As this reduction in available inventory was occurring for fix-and-flip homes, property values were also rising again nationwide. This rise happened to coincide with the coming-of-age of a very specific age group: millennials. With ballooning student loan debt and decreasing affordability trending at the same time this age group began to seriously consider purchasing a home, many millennials were locked into what some term 'a lifetime of renting.'
69% of millennials in a survey conducted in 2018 don't believe they will ever be able to afford their own home, and in Dallas alone, 7.1% of millennials say they expect to 'rent their homes forever.' The DFW area is fueled by renters, so when you consider those population numbers, that's a significant group of long-term residents.
The overlap of aging millennials with growing families, rising student loan debt, falling affordability, and a lack of readily-available fix-and-rent opportunities for investors produced the perfect foundation for a new concept: the build-for-rent community.
Rather than designing a community of single-family homes or duplexes and townhomes for long-term homeowners, build-for-rent communities are designed with long-term renters in mind. These properties cater to a demand for more room that growing families need (or even space for a home office), as well as the comfort and peace that comes from living in an established neighborhood.
It also allows renters who are otherwise barred from owning their own home due to the entry cost of a down payment the opportunity to enjoy the experience in a community of like-minded renters.
Build-for-Rent Communities Offer Serious Profit Potential
Vertical integration affords The Peak Group the opportunity to create outperforming profit margins from our wholesale acquisitions compared to what small-scale investors and other forms of equity REIT investing can achieve on their own.However, even with the incredible below-market prices we are able to source for our wholesale acquisitions, the margins on new builds in the DFW area are significantly superior.
In some markets, the premiums on build-for-rent homes are substantial, with renters willing to pay higher rental rates for detached properties and a community atmosphere than they otherwise would for apartment living within the same tier of quality.
At The Peak Group, we caught onto this trend early.
- Through the benefits of vertical integration, we are able to build rental communities of up to 75 units, with three communities (two of townhomes and one of single-family properties) already successfully completed.
- These investment properties are then placed under the care of our Peak Property Management and Peak Property Maintenance branches, respectively.
- Quality control from the start of the build—as well as a keen understanding of what renters look for in a property—leads to incredible profit margins and performance from these newly-developed rental property communities.
We have already had success with the build-for-rent communities we've completed, and it plays no small part in why we're able to offer our investors such incredible returns from REIT investing via the Peak Housing REIT.
Discover These Advantages for Yourself
An investor looking to hedge their retirement or begin developing their 'nest egg' has no reason to settle for less than the best. Our scale of operations here at The Peak Group means that an accredited investor just getting started in real estate can tap into the incredible wealth potential of build-for-rent communities for as little as $25,000.
Established investors can contribute existing properties to our UPREIT portfolio to enjoy truly passive real estate investing while taking advantage of the profit potential of new builds. At The Peak Group, we knew we had to build a better equity UPREIT from the ground up; vertical integration allows us to do just that—and it benefits you!
If your goal is to experience lasting, maintenance-free wealth, then it's time to get in touch with us to learn more. Seasoned investors looking to exit their portfolio should download our free guide to passive income through REIT investing, Let Freedom Ring!
You can also get in touch with us directly to learn more details about how our build-for-rent communities are an incredible value-add to the Peak Housing REIT offerings.
Posted by The Peak Group on December 10, 2020