The largest single family Build-for-Rent (BFR) operator in the nation has pulled the trigger on a land deal that will bring 222 purpose-built rental homes to the Orlando market.
California-based American Homes 4 Rent paid $5.77 million last week for Phase 1 of the 143-acre former St. Cloud Airfield property on Michigan Avenue, just south of St. Cloud High School.
Brent Landry, Senior Vice President of Development for AH4R, told GrowthSpotter the location, walking distance to schools, made the project especially attractive.
“Our customers place a pretty heavy emphasis on schools,” he said. “Our customers want everything that a new home purchaser wants — they just enjoy the flexibility and low maintenance of leasing.”
The neighborhood will be called Sky Lakes, as a nod to its aviation past. Landry said the company would offer at least five floorplans ranging from three to five bedrooms, with rents starting at $1,800. Each house will have a 2-car garage and fenced back yard, and the company provides on-site management and lawn care.
“Because we own and operate so many homes, we’re pretty confident that we know what today’s consumer wants, so we put in those upscale finishes, whether it’s stainless steel appliances, granite countertops, 100% hard surface flooring,” Landry said. “They’re good looking homes.”
AH4R requires a minimum 1-year lease, but most tenants tend to stay three years.
“And what we’re finding is that in our newer homes, the early indicator is they may even be staying longer, which intuitively makes sense, given that the home is brand new and no one’s ever lived there before, and it has beautiful new appliances. What’s not to love?”
Landry said AH4R will also be building an amenity center with a pool and outdoor pavilion, a clubhouse with a fitness center and plenty of indoor and outdoor social spaces.
“Inside the clubhouse, think more like a Class-A apartment complex, where they might have a lounge with a TV and people could gather, either formally or informally to watch a game. We want to encourage social connection as part of the community experience.”
The sellers, Tall Castle Development, have approved construction plans for a 355-home subdivision that includes a mix of 285 single-family lots (53-feet wide) and 80 townhomes. Tall Castle’s Mark Maciel secured the entitlements from the City of St. Cloud and the South Florida Water Management District in 2018. The company bought the acreage from longtime owner Thom LeHeup for $3.3 million and sold it the same day to American Homes 4 Rent (AH4R).
Maciel said Phases 2 and 3 of the community are under contract to Orlando developer Kal Hussein and Highland Homes. They comprise 53 detached homesites and the 80 townhomes.
Landry said AH4R owns 53,000 single-family properties in selected submarkets in 22 states, including 1,700 in the Orlando metro area. The company began expanding its Central Florida portfolio with smaller purpose-built rental subdivisions, including Zarabrooke, a 14-lot subdivision in Apopka, and Celery Cove, a 37-home subdivision in Sanford.
Other homebuilders have explored large-scale BFR development in Central Florida, but none have been able to make the numbers work. Capstone Communities had proposed a nearly 300-unit BFR community in the Four Corners area of Polk County but backed out of the project.
Avex Homes considered going with a BFR option at two locations in Osceola County but ruled them both out because of the county’s high impact fees and strict subdivision standards.
Landry said AH4R’s business model differs from most builders venturing into the BFR market because they are both the builder and operator, as compared to other home builders that are looking to bundle and sell the assets to institutional buyers.
“Our game plan is not to flip them to somebody else, which is what much of the BFR conversations are about right now,” he said. “People build them with the desire to bundle them and sell to someone else, and that’s not our approach.”
Because they self-develop, AH4R doesn’t have a to pay a builder markup and can absorb the cost of the impact fees, he said. The company expects to start horizontal development soon and will go vertical in about 12 months. Once they start new home construction, AH4R will deliver between five and eight homes per month, Landry said.
“Right now we are the trailblazers in terms of BFR communities,” Landry said. The company will open its 60th and 61st BFR communities in the Charlotte area next month and has more projects in the pipeline. “We’ve got quite a few more coming, so we are definitely innovating in this space. And we want to be the leader in the quality of the community that we build and the resident experience that we provide."