Remaining Competitive in an Overly Competitive Market | John Burns Real Estate Consulting

Remaining Competitive in an Overly Competitive Market



If there used to be a hot tub full of cash for build-for-rent (BFR) deals, now there is an Olympic-sized swimming pool. Demand for BFR development is at an all-time high. BFR developers can usually outbid their competitors for land. Mike Moser, CEO of Starwood Land Advisors, explains to us how his team strategically focuses their investment efforts in the BFR and equally competitive general residential development world. Here are some key takeaways of our podcast with Mike.

Where the profit is

  • In this highly competitive landscape, Mike and his team typically look for deals hairier than Bigfoot. Entitlement issues, rezoning, redevelopment plans, whatever: bring ’em on.
  • Starwood has a wide footprint, but their biggest single position is Texas.
  • Higher densities allow BFR developers to often outbid their for-sale residential colleagues in buying land.

Strategy

  • Large master-planned communities allow Starwood to work with multiple builders at the same time.
  • A cohesive community is more efficient than one-off rental units scattered throughout a master plan. This allows the BFR community to have its own space and effective maintenance plan.

A look into his crystal ball

  • Developable land is the biggest supply shortage.
  • Mike predicts 2021 new home sales will be below 800,000 and won’t go much higher in the near-term.
  • Soaring home prices paired with rising interest rates are going to create serious affordability issues for home buyers in the future.
  • However, Mike sees solid market fundamentals for the foreseeable future. When the next recession does hit, it will not be as dramatic as the last.
  • Affordable markets with diverse economies will fare best.


For a full transcript of this episode, click here.

 

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Dean Wehrli If you have any questions about our podcast, please contact Dean Wehrli, Principal at (916) 647-3263 or by email.
Shelly Chen If you have any questions, please contact Shelly Chen, Consultant at (916) 753-4631 or by email.