DEVELOPMENT
Build-to-Rent Homes Growing in Popularity
While supply chain issues are slowing housing sales , new homes built as rentals are on the rise .
Two such developments are under construction in the Sacramento region . The 152-unit Cyrene at Fiddyment in northwest Roseville was roughly half built as of March . Its developer , Arizona-based Curve Development , is also working on an 81-unit build-to-rent development in nearby Lincoln called Cyrene at Meadowlands that could begin leasing toward the end of this year .
Various factors are bringing these sorts of developments to market . Among them are supply chain challenges impacting construction cycles , says Clifton Taylor , whose company Taylor Builders developed the lots for Cyrene at Fiddyment and sold them to Curve Development , with two companies , Timberworks Construction and Nexgen , acting as general contractors .
“ With the supply chain issues forcing turn cycles for builders that would normally be building homes in 4-6 months to 8-12 months , it ’ s not uncommon for people to relocate , rent one of these units for a year while their homes are being built , and then move in ,” Taylor says .
While Curve Development , which also operates in Arizona , Texas and Florida , is solely producing build-to-rent homes right now , company president Nathan Pile says , “ We really try to build homes that people would purchase or rent .”
As of March , approximately 22 of Cyrene at Fiddyment ’ s homes were being rented .
They serve people like LaKeya Montaie , who says she is raising her grandchildren and wanted to bring them to a nice area . Though she works in the real estate industry , Montaie has never owned a home .
For a $ 7,000 deposit and $ 3,500 monthly rent , she got a new threebedroom , two-and-a-half-bathroom home in September 2021 that ’ s walking distance from Riego Creek Elementary .
Taylor says JEN Partners , which invests in his company and Curve Development , backs similar companies around the country . Aside from helping address a housing shortage , Taylor says build-to-rent homes are cheaper per square foot than multi-family construction and that there will always be people needing to rent based on finances or other factors .
For now , build-to-rent lots are a small part of what Taylor Builders does . Taylor says they comprised 150 of 1,800 delivered lots last year and will represent 250 of 2,600 lots his company will build this year . This type of lot is likely to also have a minor presence at Placer Ranch , which Taylor Builders purchased last year .
“ It seems to me like there ’ s a place in the real estate industry for this sector ,” Pile says . “ There ’ s really no reason that it wouldn ’ t work . People want to live in a home . And if you don ’ t want to buy it and you want to have it managed by somebody else , this is a perfect opportunity .”
– Graham Womack doors , albeit with some conditions . ( Sacramento County has enacted a similar arrangement , according to spokesperson Laurie Slothower .)
“ They have to propose what they ’ re going to do with the opening ,” DeLeon says . “ In Lennar ’ s case , they were going to put plywood up and then paint it so it would look kind of decent . But that would give some security to the homeowner .”
Ignacio Moreno and his wife live around the corner in Northlake from a house that had bare plywood covering the garage opening and bits of red tape . It doesn ’ t appear to be the first house with a plywood garage door that Moreno has seen . “ That ’ s one thing you definitely notice right away — they get close to finishing them but they put the plywood up where the garage door should be ,” he says .
Granted , getting a garage door in doesn ’ t necessarily end problems . Dunmoyer speaks of a colleague who bought a new home in the Sierra Nevada mountains near the California border over the summer . His colleague had to park in his driveway for three months until he could get openers installed .
Both the city and county have incentive to work with companies like Lennar because jurisdictions across the state are far behind on housing numbers . Matt Hertel , the city ’ s long range planning manager , says Sacramento had its best year in 2020 since 2006 for creating housing , issuing building permits for 3,764 units .
That was still around 1,900 units short of what the city would need on average to meet the state ’ s Regional Housing Needs Allocation goals by 2029 . “ I would not bet on us meeting our RHNA goals … but I think we ’ re in a better place than we were in 2015 through 2018 ,” says Greta Soos , an associate planner for the city .
In this environment , builders are doing well , with Dunmoyer acknowledging , “ We had a good year , yes .” The California Association of Realtors has forecast median home prices in the state rising 5.2 percent to $ 834,400 in 2022 following a projected 20.3 percent increase to $ 793,100 last year .
56 comstocksmag . com | April 2022