How you can invest in the growing rental market
The build-to-rent model is redefining housing development as we know it across America. Developers are increasingly constructing neighbourhoods of single-family homes with the sole intent to lease them, rather than sell them.
In late 2023, the U.S. Census Bureau reported the share of build-to-rent homes had doubled since 2021, reflecting 10% of all new homes. While that may still seem like a relatively small slice of the full pie, the Wall Street Journal found that major investors are tapping in with hopes the figure will grow. Their research spotlighted several major players including Blackstone (BX), Invitation Homes (INVH), and Pretium Partners (PVG) who are actively investing in this market.
Retail investors aren’t excluded from these opportunities either.
For instance, DLP Capital and its investment funds focus on financing, constructing and operating safe, attainable rental housing communities — including multifamily and single-family rental units. The company offers accredited investors access to the growing rental sector through their REITs.
DLP Capital is also committed to generating measurable social and environmental impact alongside financial returns. They even offer a flexible investment structure so that investors can redeem their capital if needed without having to wait a set number of years during lengthy lock-in periods.
With a track record of identifying high-potential properties and over $5.2 billion in assets under management, DLP Capital helps investors capitalize on real estate’s long-term value.
DLP Capital’s funds target potential annual returns between 9% and 13% — almost at par with the S&P 500 index’s 10.26% returns annually. But you get two distinct advantages by investing in DLP Capital’s funds — portfolio diversification and a potentially lower tax bill.
For those who prefer accessible fractional investing, Arrived — an online platform backed by prominent investors like Jeff Bezos — offers retail investors the opportunity to buy shares in existing rental and vacation homes. You can get your foot into the real estate market without buying property outright, while taking advantage of the growing demand for rental investment opportunities.
Arrived allows you to browse through their curated selection of homes, each vetted for their appreciation and income potential. Once you find a property you like, you can choose the number of shares you want to buy and start investing with as little as $100.
Retail giants rent property, too
This trend isn’t only confined to residential properties. The rising popularity of rental investments extends into the commercial property market as well. It’s also happening all over North America.
This summer, Western Residential analyzed Canada’s largest commercial real estate markets and found developers had shifted focus toward purpose-built rental construction, sometimes at the expense of new residential condominiums and commercial buildings.
A recent report from Cushman & Wakefield also commented, “for the first time in years, the retail market is at a point of being supply-constrained — at least for space in quality shopping centers."
With both commercial and residential supply constrained, rental prices could be pushed higher, creating attractive returns for investors.
First National Realty Partners (FNRP) offers accredited investors access to these types of promising retail-anchored real estate investments, without the legwork of finding deals yourself.
The FNRP team has developed relationships with shopping centers and health-care facilities across the U.S., as well as the nation’s largest essential-needs brands, including Kroger, Walmart and Whole Foods.
They also offer white-glove service for investors, providing key market insights and finding the best properties both on and off-market, while investors can passively collect distribution income.
You can engage with experts, explore available deals and easily make an allocation, all in one personalized secure portal.
Why homeownership remains out of reach for many
The affordability crisis in housing isn’t only exacerbated by rising prices and a supply shortage. Elevated mortgage rates also make homeownership a challenge. As of December 29, the average 30-year mortgage rate is hovering just over 7% — not far from its five-year high of 7.9% in October 2023.
Adding fuel to fire are claims, such as those made by WSJ, the Federal Reserve is likely cut rates only twice next year, according to a report from The Associated Press.
Nonetheless, some Americans will simply prefer or need to buy a home. Many will also still be paying off their mortgage, and perhaps unable to consider other investment opportunities at this time.
Both can benefit from shopping around for a more competitive rate. 2023 research from LendingTree found that doing so can save borrowers over $76,000 throughout the loan’s lifetime.
However, negotiating a new mortgage rate can be a cumbersome process if you don’t know where to start. Mortgage Research Center (MRC) offers a quick and efficient way to compare mortgage rates and estimated monthly payments from multiple vetted lenders at once. All you have to do is enter some basic information, such as your zip code, property type, price range, and annual income.
Based on the information you provide, MRC displays personalized mortgage offers near you.
After you match with a desired lender, you can set up a free, no-obligation consultation to make sure you’ve found the right fit.
