In this episode of the “How to Scale Commercial Real Estate” podcast with Sam Wilson, the CEO and Founder of Strata SFR Adam Stern talks about why he started his company, the ins and outs of selling single-family rental portfolios and build-to-rent properties, and he also shares tips on how to stay on top of your game and avoid burnout. 

Strata SFR is a real estate brokerage firm that specializes in both single-family rentals and build-for-rent projects.

As a result of the pandemic, single-family rentals are on the rise. In the podcast, Adam says, “The single-family space has seen a fairly steady uptick in people renting single-family houses as opposed to buying single-family houses — or as opposed to buying multi-family houses — and I think that’s just a sign of the times.”

Having worked in the institutional single-family residence industry for the past ten years, Adam Stern is uniquely positioned to talk about what it takes to be successful in the space. Tune in to this episode to get some background on SFR (single family rental) and BFR (build for rent) investing.

If Adam has one piece of advice for investors looking to get into this space, it’s this: “Form a thesis… For any investor who’s coming into this space, do some research on what market you want to be in and why. Keep in mind the tenant is probably the most important thing at the beginning of the process.”

Later on, Adam addresses his work process, laying out exactly what he looks for in prospective BFR opportunities, and the due diligence required to ensure that the market is going to do well: “For every ten projects I look at, I find one that’s worth bringing to my buyers.”

Podcast Contents

1:45 Adam’s Career Arc and Background

  • 1:59 Launching an Online Training Company for Realtors During Housing Crisis
  • 2:33 Marketing Trained Realtors to Distressed Residential Real Estate Firms like Invitation Homes
  • 3:10 Expanding into a Real Estate Portfolio Training Platform Connecting Small-Cap and Mid-Cap Investors to Institutional Investors
  • 3:50 Explaining How Build-to-Rent Got Its Start
  • 4:10 Starting Strata SFR to Identify Build-to-Rent Opportunities

5:39 How Build-to-Rent Works and How to Keep It Working

  • 5:40 Surveying Different Capital Sources in Southeast for Common Threads
    • 6:15 Build-for-Rent Companies Want Exposure to Solid Fundamentals (Sizeable Population, Job Growth, and Favorable Demographics)
    • 6:22 Identifying Top Markets in Southeast for BFR Opportunities
    • 7:05 Determining Attributes for Desirable Real Estate (Nearby Amenities
    • 8:55 How to Think About and Categorize Deals
    • 9:40 Next Steps After Identifying Ideal Features for BFR Project
  • 10:30 “Secret Sauce” for Why Strata SFR Works: 10-to-1
    • 10:50 Explaining Thought Process Behind Disqualifiers for Possible Projects
    • 12:20 Bringing Research to Possible Buyers
  • 12:46 Monetizing the Process: How It Works

14:09 How Strata SFR’s Model Differs from Marketplace Businesses and Traditional Brokerage Businesses

16:38 Why People Build BFR Projects Instead of Apartment Buildings

  • 17:01 The Segment Demands (or Strongly Prefers) Single-Family Housing

18:40 Return Structure of Single Family vs Multi Family

  • 19:04 Comparing C Class Multi-Family Buildings to Similar-Yield Single-Family “C Properties”
  • 20:31 When BFR Might Give a Better Yield Than Multi-Family

22:00 Closing

  • 22:20 One Piece of Advice Adam Would Give to Potential Investors: Form a Thesis
  • 23:30 How Adam Stays on Top of His Game: Technology
  • 24:35 Giving Back
  • 25:32 How to Contact Adam