DENVER— Two Arizona-based real estate companies are targeting Colorado to invest in build-to-rent home neighborhoods.
Owning a home can feel nearly impossible in a competitive market like Denver where homes are selling more than $100,000 above the asking price and multiple offers are taking houses off the market faster than ever. The average price for a single-family detached home in the Denver metro area is upwards of $700,000, according to the Denver Metro Association of Realtors. To give potential buyers and renters more options and liberty, investors are buying up land and building neighborhoods of homes specifically zoned to be permanent rentals.
In 2018, Josh Hartmann, the CEO NexMetro Communities, broke ground on his first build-to-rent neighborhood in Colorado: Avilla Buffalo Run in Commerce City. It’s 123 detached single-story homes with a backyard. The 1,000-square-foot homes offer the amenities of an apartment, including maintenance, while also enjoying the lifestyle of a home without a major down payment.
“Our average rent is $2,200 to $2,300 a month, so substantially less expensive for a smaller home,” Hartmann said.
Hartmann said his company, which is backed by investors, has experienced tremendous success. He said build-to-rent homes attract young professionals and empty-nesters looking to downsize. So far, the company has built more than 40 Avilla neighborhoods across the United States and the average lease is 16 to 18 months.
“We knew it would be strong in Colorado mainly because of the lifestyle up there,” Hartmann said. “There is a lot of people that like to get out and do things and they want to have a maintenance-free lifestyle.”
The company expanded to and created permanent homes to rent in Brighton (Avilla Prairie Center) and Thornton (Avilla Eastlake).
The Arizona-based company launched their build-to-rent project in Phoenix in 2012 before buying up property in Colorado.
Most recently, Walton Global Holdings, an international real estate management company based in Arizona, announced plans to build 600 homes in Lochbuie. A spokesperson said 75 to 125 homes could be single-family rentals. It’s unclear if the rental homes are going to be permanent rentals or rent-to-own homes.
The company website states that the demand for apartment-style living is shifting to single-family homes in master-planned communities.
Tony Hernandez, a MSU Denver professor and expert in housing, said it’s a great property investment for real estate investors, but there is more to consider as the renter. He said while some companies only offer permanent rentals, others may offer rent-to-own homes. He added that it’s always best to be cautious, read the fine print, weigh your options and talk with a housing nonprofit. He added that there are pros and cons to the build-to-rent movement.
“For the next generation, that means I cannot buy a house and use the equity to send my kids to school,” Hernandez said.
Hartmann’s plans to continue to expand permanent rental home neighborhoods across the Denver metro area. His goal is to build between 200-300 homes a year in suburban communities.