It’s been another interesting month for investors and builders alike, as the market continues to stay as hot as a southern summer. Right now there is a massive flood of money coming from institutional investors, mid-sized funds, and even smaller, non-institutional investors. In this video, Strata SFR CEO Adam Stern talks through his May update, giving his take on the market for both SFR and build for rent.

What does the market look like for SFR Portfolios right now?

In the first 5 minutes of the May update, Adam discusses all things SFR. He first notes that, “sellers are coming to the realization that the market is hot right now… what we have seen in the past few months is that the cap rates have been compressed by anywhere between 50 to 100 basis points.”

SFR Portfolios are selling for a lower cap rate than they ever have historically. Why is that? Adam notes a few reasons:

  1. Resale inventory are at all-time lows
  2. Demand is up
  3. Lumber prices are up
  4. New construction volume has slowed

For these reasons, SFR Portfolio owners are in a great position. This is because investors who have raised money to infiltrate the American rental housing market are looking for opportunities.

What are current Capitalization Rates for well-managed SFR Portfolios?

Operators who have well-managed portfolios are getting capitalization rates in the mid to high 4’s, assuming ARV (After Repair Value) does not limit them.

What’s the bottom line? It’s easy to find investors to compete for properties right now and here at Strata SFR, CEO Adam has a team of experts analyzing and packaging portfolios every single day. Our strategy is simple: we don’t blast SFR portfolios out into the market; our strategy is direct, well-thought-out and totally off-market. We find the right investors that are the most aggressive and put them in competition for those opportunities in order to keep tight control over the disposition process. End result, we are consistently achieving asking prices or better.

Strata’s SFR Portfolio May Update

Strata SFR has a whole team of associates constantly reaching out to and connecting with portfolio owners in the southeast market. This month Strata has put together several SFR Portfolio sales, including two in Atlanta and one in Dallas. All of our sales traded in the high 4’s, low 5’s in terms of “going in” Cap Rates and stabilize to reach the high 5% to 6% Cap Rate range or better.

What does the market look like for Build-for-Rent right now?

From about 4.5 minutes to the end of the video, Adam discusses all things Build-for-Rent. In the current market, Adam has observed a massive shortage of supply on the land side. This is because land is not being entitled as quickly or as frequently as it needs to in order to keep up with demand. He notes that, “institutions that target major southeast markets are competing feverishly against builders going after lots and land.”

What does this mean for builders? Competitive pricing and terms. In terms of Adam’s overall take, he says that “if you have anything, if you are a builder, a landowner, or a portfolio owner; if you’re thinking about an exit, this time in history could not be better for you. And if you’re a buyer, you really need a strong network to get you connected with opportunities.”

Strata SFR’s Build-for-Rent May Update

This month, Strata closed on One Build For Rent Projects and put 2 others under contract One included entitled land in a submarket of Wilmington, North Carolina,. This opportunity consisted of 190+ “paper” lots that will be developed into townhomes. We also put another project that consisted of 100+ finished townhome lots in Greenville, South Carolina. One was a land deal, the other a lot deal.

If you’d like to join our current network of investors, builders, landowners, or portfolio owners, join the Inner Circle to be added to Strata SFR’s expansive community.