More and more people are turning to real estate to diversify and provide more financial freedom. Although many people think that multi-family or commercial real estate is the only way to access big profits, single-family home growth dominates the real estate investment world! 

The post-pandemic world is beginning to come into focus

While several countries are still gaining momentum in their recovery, there is enough data for investors to plan their next moves.

Gross Domestic Product (GDP) surged in the first quarter due to government stimulus and continued consumer spending.

While we don’t know exactly what the future might look like across the spectrum of real estate, according to a new report by Walker and Dunlop, single-family rental home growth is expected to outpace multi-family, office, retail, storage, and hospitality growth through at least 2022.

Tenants who have moved away from densely-populated cities may not be eager to return and seek employment locally. Others will resume pre-pandemic lifestyles in the coming months, helping set benchmarks for housing demand.

However, many employers are already catering to employees’ demands of having a more nomadic lifestyle…

…Add to that the looming prospect of asset inflation, diminished inventory, and ultra-low interest rates, and it’s no wonder that consumers and investors alike are clamoring to purchase Single Family Rental Homes (SFRs).

As the demand for the SFR asset class continues, institutional investment capital in search of yield is also demanding a seat at the table.

In the past, the nature of buying, owning, and operating SFRs has kept these institutions from being involved. Currently, institutional investors comprise less than 2% of the SFR market compared to 55% ownership in the multi-family space.

Build-for-Rent

Institutional capital is also flocking to the new “build-for-rent” (BFR) space. BFRs are homes that are operated as single-family rental investments, similar to traditional multi-family housing. BFR is a relatively new concept and comprises only 5% of new homes built.

That said, single-family rental homes are rapidly becoming an asset class on par with the more traditional sectors such as multi-family, retail, and office spaces.

One of the nation’s largest homebuilders, Lennar recently launched a $4 billion single-family rental platform as they seek to sell homes and make them available for rent.