Large floor plans in BTR rob tenants of apartment living

Single-family rental and build-to-rent are the new buzzwords in commercial real estate. Both sectors are seeing growing demand, but Sudha Reddy of Haven Realty Capital notes that the demand for single-family rentals underscores the need for units with three or more bedrooms, otherwise known as large floor plan units.

“Larger three-bedroom and four-bedroom rental units have never been built for this purpose before,” Reddy, CEO of Haven Realty Capital, told GlobeSt.com. “New multi-family projects consist primarily of one and two bedroom units with a small percentage of three bedrooms. Construction for rent offers tenants the opportunity to rent larger three and four bedroom units similar to traditional homes for sale, which include garages and yards, in a housing community.

Haven has a long history in the industry. It has been investing in single-family rentals since its creation in 2010, and invested exclusively in SFR real estate until 2014, when it also began to integrate a multi-family strategy. “In 2015, we started investing in multifamily in a number of markets where we had previously had exposure to SFR,” explains Reddy. “We quickly realized that many investors were more comfortable with multi-family than SFR due to the perceived efficiency of management and capital deployment of owning an asset in one location.”

Reddy believes build space for rent associates the SFR property type with multi-family, fueling an emerging demand segment for large-area, purpose-built rental units. “Haven sees a tremendous opportunity to bring quality housing and professional management to this category of underserved rentals,” says Reddy. “The demand for newly built single-family rentals from families and empty nests is greater than ever.”

Haven not only saw demand increase, but also capital. “It is important to note that investor demand for BTR projects is equally strong. Traditional multi-family investors have become comfortable investing in BTR due to the unique location, strong single-family rental demographics, and economic returns,” says Reddy.

These are the same reasons Haven is so active in the industry. “We are bullish on BTR as it resolves a real imbalance between supply and demand for larger rental housing in the United States, with the potential to provide a better tenant experience with high quality homes and professional management. says Reddy. “We believe the unique location component of the strategy will attract large institutional providers of equities and multi-family debt to the sector, thereby increasing liquidity.”