If there used to be a hot tub full of cash for build-to-rent (BTR) deals, now there is an Olympic-sized swimming pool. Demand for BTR development is at an all-time high. BTR 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 BTR 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 BTR developers to often outbid their for-sale residential colleagues in buying land.
- 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 BTR 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.
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