Build To Rent Concept Thoughts?

[Chris G.]

Anyone have an opinions on these build to rent concept companies. In my area there's a company that offers this but has a sister property management company so once the home is built the property management is already set up as well. Since it's all one company pretty much it seems like it should work efficiently compared to an owner trying to do this all themselves. Website mentions that once the construction team notifies the management team it's almost completed they can start the advertising process. "The rental rate will never be less than what your sales contact communicated to you before your purchase" this seems like a difficult promise to keep. To me this seems like someone out of state or even local investors or beginners would look for since it's more "convenient" and would make it more difficult for other management companies to get new construction properties but then again I'm not sure how good the builder or management company is. Would love to hear others thoughts on this. 

[Angela Harding]

I’m always leery of the “new” cookie cutter programs for investors. I would first want to tour any houses already built for quality as i’ve seen a ton of “affordable homes” built for rentals and the quality is substandard. Windows fall right out after a few years. The experience of the management would also be a concern. Some of these programs in theory, look good. Then lack of experience causes the program to fail. My advice with investing is to be hands on when choosing your homes. Don’t get involved in cookie cutter programs unless they have at least a 5 year success and/or experience. If you want a house built to rent, then pick a builder and build a house. Make sure you have a property management company screened and ready to go before you choose your area if you are not managing yourself. In 2008 there were builders that did this program in florida and everyone jumped right in. Atlanta Georgia had a program that was later shut down by the SEC. There was a turn key program in Tennessee and it took years before those houses were actually worth what people paid for them. And now Guardian and Hughes Capital had a turn key program and the only people that made money was those who were on the ground level putting together the program. Thats my two cents. In the Toledo ohio area, it is still better to buy a home and update it and it rent it. Homes average about $120,000 all in and rent for about 1395.00 if you are buying from the regular market sources. Numbers are better if you are using cash and purchasing auctions. You can do cheaper but then it becomes a higher turn over area. In conclusion, stay involved in anything you invest in. Make sure you get a lot of information. It is buyer beware. I see more people actually lose money in these programs than make money. The concept of “when everyone is running in one direction, go the opposite way.” And most importantly, if someone is selling you a turn key program, how many of those homes do they own? If it makes money, then they should have their own money in also!