Want a sure sign that the bull market for rental housing still has plenty of legs? The second largest U.S. homebuilder is now offering newly-built rental properties.
On March 14, Lennar Corp. opened its first single-family rental home community, an 80-home development in Sparks, Nevada, near Reno. Rents at Frontera at Pioneer Meadows start at $1,399 for two-, three- and four-bedroom houses with amenities such as landscaped backyards, two-bay garages, stainless steel appliances, granite countertops and washer-dryers.
The Miami-based company said it now has a construction pipeline of 20,000 apartments worth more than $5.5 billion, according to Bloomberg.
“We’ve seen and continue to see outsized improvement in the rental market in terms of low vacancies and higher rental rates,” Lennar CEO Stuart Miller said on the company’s first quarter earnings conference call, Bloomberg reported. “The inability of the American family to access the mortgage market” is forcing many families to rent rather than buy homes.
While Miller said it’s becoming “incrementally” easier to obtain a mortgage, tight lending standards are still preventing many consumers from buying homes. At the same time, household formation has increased, driving up demand for rentals.
“The U.S. homeownership rate is now at its lowest level in 20 years.”
The U.S. homeownership rate is now at its lowest level in 20 years, while the vacancy rate in rental housing is at its lowest point since 1993, according to the Census Bureau. Millions of homeowners who lost their homes to foreclosure during the Great Recession have been forced to rent, and many potential buyers can’t afford to buy homes or qualify for a mortgage.
“This trend, of course, has benefited our multifamily strategy rather dramatically,” Miller said. It “also sets the stage for further improvement in the for-sale market as new households looking for a place to live compare monthly payments.”
Lennar’s rental properties are an experimental “hybrid between our for-sale and our multifamily apartment community program,” Miller added. “If the rental concept doesn’t work as well as we’d like, we can always convert to a for-sale platform.”
Lennar’s apartment division reported a $5.7 million loss for the first quarter, but the company expects it to be in the black by the end of the year, Bloomberg reported. It plans to sell about five of the communities now under construction.
Lennar is not the only home builder betting on rental housing.
Toll Brothers Inc., the largest builder of luxury homes, has also entered the rental-apartment and student-housing business to hedge against uneven demand for new single-family homes, the source said.
This boom in rental properties, of course, means property managers need the tools to keep up with it. Fortunately, Anton Systems is here to help you manage your properties, whether they’re multifamily complexes, luxury high-rise apartment buildings, condominiums or single-family rental communities, like Lennar’s.
There are many good property management software systems on the market, and you might very well have one in your own office.
Two questions: Do you use it? If so, are you getting out of it all the money you invested in it?
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