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Build-for-Rent (BFR): An Emerging Replacement Property Asset for 1031 Exchange Investors

Historically, construction for multi-unit rental properties has consisted of apartment buildings and smaller multi-family properties in the two to four-unit ranges. However, a new category of multi-unit rental property has been attracting more attention from both renters and long-term buy and hold investors: build-for-rent properties often referred to as BFR investment communities.

A typical BFR property is a community built specifically for renters that want more of a single-family experience, but with the convenience of a professionally managed community with desirable amenities. These communities typically consist of one to three-bedroom attached or detached homes with upscale finishes such as stainless appliances, quartz countertops, high ceilings, and small private yards. These properties include higher-end finishes than a typical entry-level apartment, and typically include in-unit washers and dryers, kitchen islands, hardwood-style floors, high-end lighting, and other finishes normally associated with upscale homes. A BFR community will often include amenities like a swimming pool, tennis courts, dog park, clubhouse or meeting facilities, and a workout/gym facility on site. Renters enjoy the convenience of professional management without the burdens of HOA fees or the responsibility of servicing long-term mortgage debt. BFR neighborhoods provide privacy, quality, convenience, and luxury and meet the need for more space along with a sense of community. These communities fill a growing niche for renters with lifestyle desires that are different than typical apartment renters who normally view apartment living as a temporary housing solution.

Renters often lease BFR property for longer periods because they value the upscale finishes and the nearby amenities, and the single-family-home style of privacy. Investors like BFR communities because the renewal and retention rates are higher than a typical apartment community. Also, BFR rent increases have generally outpaced apartments which is another advantage for investors seeking to maximize return on investment.

The U.S. Census Bureau estimates that 65% of Americans under the age of 35 currently rent their home. Renting is more affordable than buying a home in 18 of the country’s 25 most populated counties, and in 29 of 44 counties with a population of 1 million or more, including Los Angeles, San Diego, Chicago, Houston and Orange County, California.

Where can 1031 exchange investors find BFR investments? One source of 1031 exchange replacement property for investors seeking to acquire multiple assets is SVN | SFRhhub Advisors (www.sfrhub.com). The SFRhub.com is an online marketplace for buyers and sellers dedicated to single-family rental (SFR) and build-for-rent (BFR) investment portfolios of five or more homes.

 

1031 Exchange Webinars

Tuesday, June 29th
12:00 PM – 2:00 PM CT

CE Credit Available

This two-hour course for commercial brokers provides a concise and thorough overview of 1031 exchanges. This webinar tackles advanced issues such as partnership/LLC scenarios, creative property variations such as perpetual cellular easements (cell towers), fractional ownership, transferable development rights, reverse and improvement exchanges, how to avoid common pitfalls and related-party transactions.

Register Now »

Wednesday, May 5th
10:00 AM – 11:00 AM CT

CPE Credit Available

This one-hour intermediate/advanced webinar provides a concise and thorough overview of 1031 exchanges for accountants, CPAs, and tax advisors. This webinar covers critical time deadlines, like-kind requirements, fractional ownership, oil/gas/mineral rights, related party transactions, partnership/LLC scenarios, reverse and improvement exchanges, and how to avoid common pitfalls.

Register Now »

 

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Job well done!! It was a pleasure working with you on the 1031 Exchange. You made it so easy and effortless. Thank you again for taking care of my clients and making it all come together. I appreciate it. I look forward to the next one.

  • – PETER, COLORADO

 

Markets with Greatest Increase in Rents

Lockdowns, as well as the economic stimulus and eviction moratoriums, have affected multifamily markets to varying degrees. Some markets experienced a large increase in rents while others experienced double-digit drops in rent.

Read more about the five markets with the greatest increase and the five markets with the greatest decrease in rents one year into the coronavirus pandemic lockdowns.

Read More »

 

New Fast-Paced Webinar!

This webinar provides an overview of 1031 exchanges and the delayed exchange rules and time requirements – all in only 10 minutes and 31 seconds. This is a great resource with lots of valuable information for investors exchanging for the first time or needing a quick refresher.

Click below to watch this very informative webinar.

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    1031 Exchange Summer Update – 2020

    By |July 23rd, 2020|Categories: Uncategorized|

    The 1031 exchange market nationally has been like a roller coaster this past spring and summer, plummeting down in April and roaring back up starting in June. In late March and April exchange activity [...]

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    New Proposed 1031 Real Property Regulations

    By |June 11th, 2020|Categories: Uncategorized|

    Statutory Limitations on Like-Kind Exchanges The proposed regulations provide guidance implementing changes enacted in the Tax Cuts and Jobs Act (TCJA). These proposed regulations amend the existing regulations adding a definition of real property [...]

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    IRS Notice Extends 1031 Exchange Deadlines

    By |April 10th, 2020|Categories: Uncategorized|

    Breaking News On April 9, 2020 the IRS issued Notice 2020-23. This Notice extended many deadlines for taxpayers affected by the COVID-19 pandemic including Section 1031 exchange time deadlines. This Notice provides that any person [...]

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    Top 1031 Exchange Pitfalls

    By |March 10th, 2020|Categories: Uncategorized|

    Top 1031 Exchange Pitfalls Taxpayers should always review all aspects of any 1031 exchange with competent tax/legal advisors familiar with your specific transaction, objectives and the relevant facts. This article addresses some of the [...]

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