EP180: The Next Real Estate Evolution
It’s not from those hyped-up NFT or crypto bros pitching on Instagram nor is it the latest Airbnb arbitrage strategy.
Instead, it’s housed in what many dubs as the “boring” realm but is nothing short of brilliant. 🙌
It offers steady cash flow, sky-high upside potential, lucrative tax perks, and here’s the kicker – it’s right under your nose.
So, hold onto your seat as we delve into this powerhouse business in less than 6 minutes. Plus, you’ll learn how to become a modern-day Alchemist, turning readily available substance into gold
Now before we explain to you what this “boring” business is, let us take you to the old days the 1300s during the era of the Black Death, and explain why a gold digger, oops, we meant a grave digger was such a noble profession…
Yeah, sure when a gold digger would have been considered noble right…
So, Grave Diggers and Undertakers as the name suggests are in charge of grave preparation along with all the things related to the burial of someone.
Yeah, not exactly a revered profession.
Now of course, while this profession may be deemed scary, gross, dangerous, or just downright traumatic, of course it was and still is a necessary profession. Yet, especially during times of plagues or wars, their services were in high demand, leading to a significant income.
Even during our most current pandemic, sadly you saw that cemeteries and crematoriums were at or exceeded full capacity.
Similar to how the grave digger profession was overlooked through the years, the same can be said about the Build-to-Rent business.
From Dust to Gold ✨ – The Build-to-Rent Alchemy:
Imagine transforming plots of untouched land into vibrant, revenue-generating communities.
➡️ That’s Build-to-Rent — AKA BTR for you. This peaceful residential haven is without disturbances from above or below. It’s the marriage of multifamily apartments and single-family rentals, producing the next-gen real estate prodigy.
Here’s where the magic brews. 🔮🪄⚡
With Build-to-Rent, every shovel of dirt we overturn translates to growing gold reserves metaphorically. Starting from raw land, each stage of development accelerates the property’s value.
✔️ Entitlements? Ka-ching, the value rises.
✔️ Civil plan approvals? Another spike.
✔️ Horizontal development completion?
You guessed it – the meter ticks upward. The crescendo doesn’t stop as we vertically ascend, with every leased unit pushing that value even higher. Upon reaching stabilization, the crescendo maintains its momentum.
But the thrill doesn’t end there.
At each juncture, there’s an exit door, should you wish to cash in on the ever-escalating value.
Talk about exit flexibility!
And just when you thought it couldn’t get any juicier – think of individual unit sales and multi-cash-out refinancing opportunities.
BTR dances on the line between privacy and community. It’s the “I’ve got my space but also a slice of community pie” ethos. Imagine a ‘rented’ home with freedom strings attached, letting you bask in the pride of quasi-ownership, all while enveloped in community warmth and slick professionally managed amenities.
Oh, and the 🍒 cherry on top?
Zero upstairs or downstairs neighbors.
As market dynamics shift, Build-to-Rent confidently steps up, positioning itself as the modern remedy to evolving housing desires. It offers a rejuvenated approach to the timeless demand for single-family living while promising more robust revenues and fewer tenant turnovers compared to your traditional single-family home rental setups.
Think back to the aftermath of the Global Financial Crisis.
Deep-pocketed private equity players were assembling scattered Single-Family Rental and multifamily apartment portfolios.
Today’s BTR? It’s reminiscent of diving into multifamily apartments post that 2010 financial turbulence – embryonic, booming, and ripe with vast opportunities aka the growth stage.
BTR’s recent magnetism?
It’s growing 🌳, with the last half-decade seeing institutional investors swiveling their chairs towards it.
Their rationale? BTR’s distinct appeal evokes memories of traditional multifamily vibes but with a contemporary operational flair. The ace card? BTR’s adaptability to either be a community or cater to individual home seekers. Flexibility, reimagined.
👉 Guys, the Numbers Don’t Lie:
Jump into the stats, and BTR starts looking even jazzier. BTR’s transaction volume was a modest $2.4 billion across 2021 and 2022. Sounds chill?
That’s a whopping 250%+ leap over the previous five-year mean.
Now juxtapose this with the traditional multifamily’s hefty $311.3 billion average in the same timeframe.
It’s clear – BTR is the up-and-coming contender in the ring.
CBRE foresees the investment skies raining heavier on BTR. The forecast? As capitals lean more into BTR it’s growth trajectory is slated to skyrocket.
In essence, with BTR, we’re standing at the precipice of a real estate evolution. The smart money? It’s on BTR.
That’s it for us today; thanks for tuning in! Make sure to check out our other episodes and send us your questions and comments; we love hearing from you.
Until then, dream big, and keep making those dreams a reality!
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