Top 5 Takeaways from the 2024 Single Family Rental (East) Conference

Last week, the CoreVest team attended and proudly sponsored the IMN Single Family Rental (East) Conference in Miami, FL. For over a decade, this conference has been the cornerstone gathering for industry leaders in the SFR and BTR sectors, offering unparalleled insights into market dynamics. With each year, the conference reveals a spectrum of challenges and opportunities that shape our industry’s path forward. Here are our teams five key takeaways from the event:

1. Optimism and Increased Transaction Readiness

Optimism was a dominant theme at the conference, with many attendees expressing confidence that the market has weathered its toughest conditions. This sentiment has encouraged a proactive approach towards moving forward with transactions, despite prevailing high interest rates. The consensus among participants is that current interest rates are likely to persist for the foreseeable future, prompting a collective resolve to conduct business with the present rate environment in mind.

2. Cautious Approach to Cap Rates

Industry professionals are wary of properties with cap rates wider than 6%, viewing them as too risky. This cautious stance underscores a preference for safer investments in an unpredictable market. Investors are focusing on deals that promise more stable and predictable returns to ensure long-term growth and operational efficiency.

3. Growing Interest in Rate Buydowns

With Treasury rates surging over the past two years, rate buydowns have become a hot topic. These options are appealing because they can enhance loan amounts, making financing more attractive. As borrowing costs rise, rate buydowns offer a crucial strategy for making deals more feasible.

4. High Demand for Leverage and Competitive Loan-to-Value Ratios

The market shows strong demand for leverage, especially in the fix-and-flip and lines of credit (LOC) sectors. Competition is fierce within the 80% to 90% loan-to-cost (LTC) range, and there’s a notable shift with sponsors now seeking 70% to 75% loan-to-value (LTV) ratios. This trend reflects confidence in market recovery and a shift towards more aggressive investment strategies.

5. Sustained Interest in SFR and BTR

The SFR and BTR sectors remain highly attractive due to their easier exit strategies, quicker lease-up periods, strong demand, and limited inventory. National data shows a 4% increase in the rental index for the top 20 MSAs, while mortgage payments have risen by 9%, making renting more affordable than owning. Additionally, high mortgage rates have excluded millions from homeownership, with income growth outpacing rent increases and many opting to invest savings elsewhere. Renting has now been cheaper than owning a home for 17 of the past 24 years, and stable cap rates indicate a balanced investment environment, further driving institutional interest in these sectors.

In conclusion, our participation in the IMN Single Family Rental (East) Conference provided invaluable insights into the ever-evolving real estate landscape. These insights highlight the resilience and adaptability of the real estate market, emphasizing strategic leverage, interest in rate buydowns, and the continued strong demand of BTR and SFR investments as key drivers for future transactions.

We extend our sincere gratitude to IMN for hosting another enlightening conference and our appreciation to our clients, partners, and colleagues for their contributions in making this yet another successful event. Lastly, a special thank you to those from our team for their contributions to the takeaways above: Fred Matera, Justin Driscoll, John Stauffer, Vince Cicchi, Stephen O’Shaughnessy, Oliver Fair, John McDermott, and Ellie Kirkpatrick.

CoreVest is a market leader in real estate investment financing needs and has helped thousands of investors finance over 150,000 units across the nation. We’d love to talk with you directly on how we can maximize the value of your investment projects or properties. Call us today at 844.223.7496 or email at [email protected] to discuss how CoreVest can help you grow your business!