Historically, single-family homes have largely been erected for the very singular purpose of being placed on the for-sale market.
Today, though, the trend of renting out single-family homes is rising in popularity in Atlanta and beyond, and some builders are even constructing houses as rentals.
That’s according to Chris Jasinski, managing partner and cofounder of JTW Advisors, a mergers and acquisitions advisory firm focused on the homebuilding industry.
Jasinski tells Curbed Atlanta he expects the single-family rental (SFR) and build-to-rent (BTR) classes to become more prominent in Atlanta in coming years, largely because new homes require less capital expenditure than existing ones.
Essentially, many investors who turn single-family homes into rental units purchase properties with considerable wear-and-tear, and starting with a clean slate offers more financial flexibility, in Jasinski’s estimation.
Build-To-Rent is “currently a major trend in the SFR industry,” Jasinski wrote in an email. “Global investors seeking yield in our low-interest rate environment, combined with the appreciation of single-family homes making it difficult to find lucrative resale homes to purchase, has pushed SFR operators to begin building their own SFR communities.”
Jasinski wasn’t able to provide statistics to illustrate the proliferation of BTR trends in metro Atlanta, although he said, “On the supply side, Atlanta is one of the highly demanded markets by SFR owners/operators and BTR builders.”
With rare exception, as Jasinski has observed, “institutional capital has avoided tertiary markets where the SFR housing stock remains the domain of fragmented mom-and-pop owners/operators.”
There’s also abundant research to suggest that single-family rentals are becoming more common.
Roughly 1.5 million rentals are available to metro Atlantans, according to the National Rental Home Council.
An NRHC press release suggests that, as of 2015, “Atlanta’s single-family rental companies had poured more than $500 million into renovating homes, or roughly $21,000 per home,” ostensibly meaning single-family rentals are getting nicer.
That’s also a plus for housing affordability, per the organization’s research.
In 2018, the average price to buy a home in Atlanta jumped 8 percent. Nationwide, the median down payment for a home was then roughly $15,500.
“Meanwhile, median single-family rentals cost roughly $1,600 a month—and charge less per square foot than apartments,” according to the NRHC.
Renting single-family residences also affords tenants more flexibility to uproot, as opposed to buying, and it allows landlords to charge more than run-of-the-mill multifamily units.
Perhaps it won’t be long before Atlanta sees an uptick in houses being built for the sole purpose of renting.
In past real estate cycles, it might’ve been a far-flung concept, but something similar has already been seen at projects like LaFrance Square, near Edgewood-Candler Park MARTA Station.
The project, comprised largely of townhomes, is poised to offer more than 100 rentals where an old warehouse once stood.
Another for-rent townhome property, Ashley Gables, debuted in Buckhead last year, with rents topping $7,000 monthly.
The Camden Paces project is another example of townhomes built to rent in Buckhead.