Quinn Residences Grows Portfolio With 820 BTR Homes
The company has expanded its presence in Florida, Georgia, and North Carolina, also making its first acquisition in Tennessee.Better Financing Starts with More Options$1.2M offered by a Bank at 6.0%$2M offered by an Agency at 5.6%$1M offered by a Credit Union at 5.1%Click Here to Get Quotes
Photo by Simi Iluyomade from Unsplash
Atlanta-based Quinn Residences has acquired five build-to-rent single-family communities across the Southeast. The properties encompass 820 homes in different development phases in Florida, Georgia, North Carolina, and Tennessee — a new market in the company’s portfolio.
Quinn’s first Tennessee investment is The Guild in Chattanooga, a 92-unit community comprising a mix of two-, three-, and four-bedroom homes. The property is scheduled for completion by the third quarter of 2022.
The company expanded its Florida footprint with the acquisition of the 94-unit Towns at Lake Nona in St. Cloud near Orlando and the 260-unit Moccasin Wallow in Bradenton, south of Tampa. The communities will come online at the end of the year.
In Georgia, the firm purchased Dorchester Place in Covington, some 35 miles southeast of Atlanta. The community includes 82 detached homes, averaging 2,550 square feet. The property will welcome its first residents in early December.
Quinn also acquired Stephens Farm in Holly Springs, N.C., a property scheduled to break ground later in June. Once complete, the community will feature 292 townhomes.
The company owns more than 3,000 homes in various phases of development across five states in the Southeast. Due to robust investor and consumer demand, the firm plans to continue to expand its presence across the region. Quinn raised more than $900 million of equity instead of its initial plan to raise $250 million, indicating the strength of the build-to-rent single-family home market.
What are the benefits of investing in a Build-to-Rent (BTR) home?
Investing in a Build-to-Rent (BTR) home can provide a number of benefits to investors. BTR homes are typically built with the intention of being rented out, and they offer a number of advantages over traditional rental properties.
One of the main benefits of investing in a BTR home is that it can provide a steady stream of income. BTR homes are typically leased for a longer period of time than traditional rental properties, which can provide investors with a more reliable income stream. Additionally, BTR homes are often leased at a higher rate than traditional rental properties, which can provide investors with a higher return on their investment.
Another benefit of investing in a BTR home is that it can provide investors with more control over their rental property. BTR homes are typically managed by a professional property management company, which can provide investors with more control over the rental process. Additionally, BTR homes are often built with higher quality materials and construction standards, which can provide investors with a more reliable and durable rental property.
Finally, investing in a BTR home can provide investors with more tax benefits. BTR homes are typically eligible for a number of tax deductions, which can help investors save money on their taxes. Additionally, BTR homes are often eligible for special financing options, such as FHA loans, which can provide investors with more affordable financing options.
What are the risks associated with investing in a Build-to-Rent (BTR) home?
Investing in a Build-to-Rent (BTR) home can be a great way to generate income, but there are some risks to consider. One of the biggest risks is the potential for construction delays. As with any construction project, there is always the possibility of delays due to supply chain issues, weather, or other unforeseen circumstances. This can lead to increased costs and a longer timeline for completion. Additionally, there is the risk that the BTR home may not be attractive to potential renters, leading to lower occupancy rates and lower rental income. Finally, there is the risk of market fluctuations, which can lead to a decrease in the value of the property.
For more information on Build-to-Rent (BTR) homes, check out this article from Multifamily.Loans.
What are the advantages of Quinn Residences' portfolio growth strategy?
Quinn Residences' portfolio growth strategy offers a number of advantages. Investing in the multifamily sector is an incredibly powerful way to build long-term wealth, no matter when you pull the trigger on your first investment. The earlier you start, however, the more lucrative your investment returns will generally be. This is similar to the classic wheat and chessboard problem, where investing early is like the full experiment, where one grain of wheat becomes 18 quintillion grains, when doubled for each of the 64 squares on a chessboard. Investing late is, in many ways, like halving the number of squares on the board — which ends you up with about 4.3 billion grains. Not bad, but many, many orders of magnitude lower.
In addition, major investors like Blackstone and Avanath Capital Management have been paying attention to the affordable housing sector and have seen great returns. Blackstone announced in January that it was expanding its affordable housing program by $1 billion, and Avanath Capital Management has more than 100 affordable housing properties on its books. This shows that investing in affordable housing can be a very profitable investment option.
If you need help talking through the financing angle of your first multifamily deal, you can reach out to Multifamily.loans for assistance. They can provide you with a number of quotes to compare, free of charge, and can help answer any questions you have.
What are the potential drawbacks of Quinn Residences' portfolio growth strategy?
Potential drawbacks of Quinn Residences' portfolio growth strategy include:
- Time investment: Selecting, financing, and purchasing an apartment complex can take months. And, while you can hire a property management company to take care of many of the day-to-day responsibilities of apartment ownership post-purchase, you’ll still need to spend a certain amount of time supervising the management company to ensure your investment remains profitable. (Source)
- Local market factors: While smart multifamily investors are careful to purchase real estate in great locations, no one can predict the future. For instance, the neighborhood you thought was gentrifying could see an increase in crime and poverty, leading to a steep decline in the value of your investment. (Source)
- Vacancies and tenant issues: While tenants generally provide 95% or more of the income generated by an apartment property, they can also cause serious headaches. Even tenants with great credit and long-term leases sometimes leave unexpectedly, not to mention those who fail to pay their rent, or worse, cause significant damage to your property. (Source)
- Liability: While smart property owners always have a robust insurance policy, owners still could potentially be held liable for accidents and crimes that occur on the property. This risk is basically non-existent for comparable investments such as stocks, bonds, or real estate investment trusts (REITs). (Source)
- Maintenance expenses: From windows and railings to appliances and lightbulbs, apartment buildings often need constant maintenance, and landlords are responsible for paying for it. While insurance may cover larger items, maintenance, repair, and replacement costs are still significant expenses. (Source)
- Low liquidity: Unlike stocks or bonds, you can’t simply click to sell an apartment building, and, even if you could, you might not get the price you want. Multifamily properties often take several months to sell, and closing can be a time-intensive process. (Source)
- Tend to be less aggressive on max dollar deals. (Source)
- Tend to focus just on higher class assets. (Source)
- Less likely to do cash-out deals. (Source)
What are the current trends in multifamily financing?
According to Freddie Mac®’s predictions, multifamily origination volume is estimated to expand to $317 billion in 2019, a nearly 4% increase from the approximate $305 billion of multifamily financing originated in 2018. Factors that can be attributed to this trend include consistent investor demand for apartment properties, as well as other market forces, including a strong economy, reasonable job growth, and low interest rates.
It's unsurprising that the majority of respondents — more than 60% — pointed to rising interest rates. After all, the current federal funds rate of 4.25% to 4.5% is in stark contrast to the same time last year, when rates ranged between 0.0% and 0.25%.
Tighter underwriting standards are also a factor, which involves the standards lenders set for debt service coverage ratios, loan-to-value ratios, and more.
What are the best strategies for financing a multifamily property?
The best strategies for financing a multifamily property depend on the investor's individual needs and financial situation. Generally, the most common ways to finance a multifamily property include:
- Conventional Loans: Conventional loans are the most common type of loan used to finance a multifamily property. These loans are typically offered by banks and other financial institutions and require a good credit score and a down payment of at least 20%.
- FHA Loans: FHA loans are government-backed loans that are designed to help low-income borrowers purchase a multifamily property. These loans require a down payment of at least 3.5% and have more lenient credit requirements than conventional loans.
- Portfolio Loans: Portfolio loans are loans that are held by a lender and not sold on the secondary market. These loans are typically more flexible than conventional loans and can be used to finance a multifamily property with a down payment of as little as 10%.
- Private Money Loans: Private money loans are loans that are provided by private investors. These loans are typically more expensive than conventional loans, but they can be used to finance a multifamily property with a down payment of as little as 10%.
For more information on financing a multifamily property, please see this article.