After the financial crisis, investors began buying up foreclosure properties and renting them out.

But after the foreclosure well ran dry, investors began looking into a whole new sector – new builds. HousingWire Magazine's cover story in April outlined the growing build-to-rent sector, and the new opportunities it offers investors.

Now, many large investors are joining the trend and buying up homes from builders across the country, according to an article by Heather Perlberg for Bloomberg.

From the article:

American Homes 4 Rent, a five-year-old real estate investment trust and the biggest of the publicly traded landlords by number of homes, is buying lots and houses around the U.S. Colony Starwood Homes plans to purchase at least 600 just-erected properties over the next year from more than a dozen builders. Privately held AHV Communities LLC is plotting whole neighborhoods for those who want —without the bother of ownership —- single-family residences with some apartment-complex bells and whistles, such as fitness centers and bocce-ball courts. Residents don’t even have to mow their lawns.

The article explains the build-to-rent boom is based on the assumption that there is a significant number of people who want to live in a detached home, but can’t afford to buy it.

However, this is not the view that one homebuilder took when he opened Texas’ first build-to-rent neighborhood.

Josh Hartmann, NEXmetro Communities chief operating officer, explained these leased homes are not competing with single-family homes, but catering to an altogether different demographic: those happy to stay renters.

“People are going to live where they’re going to live,” he said, pointing out many renters enjoy the community offered and not having to keep up with the home maintenance.

The Bloomberg article points out that while new builds typically cost more for investors, they also save money on maintenance and repairs, in addition to being able to charge a 5% to 8% premium on the rents as opposed to existing homes.

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