While understanding the history of build-for-rent communities helps investors seeking superior returns gain a greater appreciation for this approach to adding properties to the Peak Housing REIT, it doesn't entirely explain the reasons why this method is ideal for REIT investing. Today, we plan to clear up the mystery surrounding the benefits that build-for-rent holds in store for our investors.
Before we can get into the details of the build-for-rent concept itself, it's worth understanding that this model only really works for passive real estate investing when you're doing none of the work yourself. If you have to try and get hands-on with sourcing your funding, planning communities, buying lots (or infill lots), and essentially forming a construction company from scratch, you're not going to gain the same financial benefits that you would with an established, vertically-integrated company structure like The Peak Group.
In fact, part of the reason that the build-for-rent approach works as well as it does is that we have the skills, tools, and resources to work on a large scale—crafting communities of up to 75 homes—as well as with profitable infill lots across the DFW area. To pull off either successfully, you either need to incorporate all your necessary purchasing and construction elements in-house or have connections on-hand that defy the scope of even the most profit-driven solo investors.
These are the kind of skills and sourcing deals you buy into when you decide to tap into the benefits of REIT investing for your portfolio through our Peak Housing REIT.
What Makes Build-for-Rent Better Than Existing Real Estate?
Including build-for-rent communities as a foundational pillar for the success of the Peak Housing REIT means that we're able to offer our investors elite returns unheard of and unoffered by many other equity REITs on the market today. Dividend yields from our portfolio are higher in part because of the many built-in advantages of this property model.
In Housing, New Almost Always Means 'Better'
You'll always have trendy renters who can find the appeal in a downtown loft built from the shell of a converted warehouse. However, investors can often get more long-term value from a newly-constructed investment.
That said, this concept of newly-built superiority only applies when you can ensure the build's quality from the very start. At The Peak Group, we have vertically integrated all the necessary components to be able to observe the quality of our builds from start to finish.
Building new (rather than simply relying solely on wholesale acquisitions) sets our approach to rental housing up for success from day one of the build—rather than attempting to recover a property from existing mistakes. This means we can build instant equity into our properties and reduce the potential overhead from maintenance.
'Aged' Properties Require Extensive Care
The older a rental property is, the more care and upkeep it tends to require in the form of costly maintenance and repairs. This is often an area where many singular portfolios take a significant dent in their profit potential. For the majority of investors who operate alone, building new units at the scale their portfolio can accommodate is simply not an option.
This forces property owners to turn to existing real estate to grow and develop their portfolios—and all of the problems associated with this strategy. When you don't understand the build history of the property you purchase, even with impeccable research, you may not realize you're walking into a costly 'money pit.'
Building a property from the ground up helps us (and our investors) avoid the extensive maintenance costs associated with aging properties. This is one more way we are able to offer elite returns through the Peak Housing REIT—and better dividend yields via passive real estate investing for you.
A 'Bulk-Build' Method Yields Better Pricing
With our approach to build-for-rent communities, we're able to leverage the scope of our portfolio for better deals when it comes to property insurance rates and lending. This allows us to secure deals that benefit the growth of the portfolio that often escape small-scale investors.
Additionally, because we build our rental properties with in-house talent, additional coverage and warranties can be applied that reduce the costs of maintenance overhead once renters have been placed within a rental.
Our maintenance (Peak Property Maintenance) is able to directly communicate with our management (Peak Property Management) as well as easily get in contact with our build team (Peak Construction Group). This level of transparency and accountability in the property pipeline is virtually unheard of—and inaccessible—for the vast majority of solo investors.
Building New Creates a Better REIT Investing Experience
This is just a brief overview of why build-for-rent communities help us grow and provide better dividend yields for our investors compared to other existing equity REITs. High-quality housing that targets a growing demand from a rental generation that may never be able to buy their own homes meets a need—and makes this method indispensable.
Build-for-rent single-family homes and townhomes are not the only way we add value to the Peak Housing REIT! Learn more when you read Our Story or visit our FAQ page.
If you're an investor interested in tapping into the benefits of build-for-rent housing via the Peak Housing REIT, learn more about how to trade in your existing portfolio of rental homes for high-performing assets when you download our guide, Let Freedom Ring!
Posted by The Peak Group on December 17, 2020