Build to Rent Boom: Beijing, Bellaire and Beyond

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Original Source: https://realtynewsreport.com/build-to-rent-boom-beijing-bellaire-and-beyond/

HOUSTON – (By Michelle Leigh Smith for Realty News Report) – Is there a new take on the American dream on the horizon?

Wan Bridge Group, a Texas-based builder and operator of build-to-rent (BTR) communities near Houston, Dallas and San Antonio, says heck, yes.

Wan Bridge is banking on research that shows a significant percentage of millennials do not want to be strapped to a 30-year mortgage. Their target market is composed of young professionals who enjoy the “Lock & Leave” aspect of renting in an environment where the grass is mowed and a maintenance team changes out the AC’s air filters.

Millennial families make up 85 percent of Wan Bridge’s current tenants who reside in the builder’s rapidly expanding portfolio of new single-family homes, duplexes, triplexes and a new wrinkle of upscale patio homes.

Upscale Build-To-Rent – $4,500 a Month

In mid-June, Wan Bridge Group introduced two of their six new patio homes in Edison Park, south of the Galleria off of Glenmont Drive and South Rice Avenue. It’s just north of the city limits of Bellaire, where new homes sell for more than a million.

Each home has 2,800 SF of living space and is valued around $500,000, says Wan Bridge’s Lisa Kennedy, regional manager. But these homes aren’t for sale. They are for rent – for more than $4,000 a month.

Each three-story home features a four-bedroom, three-and-a-half-bathroom floorplan.

Wan Bridge houses, which includes single-family homes in Kingwood, Rosharon, Pearland and in Forney near Dallas, typically rent from $1,700 to $2,300, according to the company. The firm’s ideal niche targets communities with fewer than 200 houses on 40 to 50 acres and includes larger projects such as a community planned for 800 houses in Rosharon.

The Edison Park rents begin at $4,485 a month.  “For now, that is our highest rent,” says Ting Qiao, CEO of Wan Bridge organization. “Our lowest rent is $2,020 in the 94-home Clearwater at Balmoral, a Land Tejas community in northeast Houston built around a two-acre lagoon.” The duplex and triplex community offers homes with up to four bedrooms, 10-ft ceilings, walk-in pantries and closets at 1,800 SF.

Qiao has been a familiar presence in the offices of the Builders Group building at 5210 Spruce in Bellaire. Qiao often works late and says he appreciates the warm welcome and wise advice afforded to him by longtime Bellaire builders like Tommy Cashiola. “Tommy knows a lot about the custom home business,” Qiao commented.

At last Thursday’s unveiling of the new Edison Park project Julie Dai, Director of the Texas Future Foundation presented a $1,000 check to Bellaire High School. Debbie Campbell, BHS’ Dean of Instruction, accepted the check. (She noted aa new Bellaire High is nearing completion on its new $140 million building.) Photo credit: Michelle Smith.

The young CEO of Wan Bridge moved to Houston six years ago, bought a home in Bellaire and began looking for properties where Build-to-Rent would make the most sense.  Qiao holds a Master of Business Administration degree from Carleton University in Canada. But he maintains roots in Bellaire, a municipality near the center of Houston.

“We do keep some function in the Bellaire office – our purchasing and construction operate from there,” Qiao said. Other Wan Bridge functions have moved to the top floor high-rise tower on San Felipe Road.

His plan is both ambitious and reflects a long game approach. “In Texas we build a home within six months, and this home will be there next 50 years,” Qiao says. “If we calculate whole life cycle, construction only takes 1 percent of the investment.  We design for the resident, and our ambassadors.”

Qiao was attracted to Bellaire, he says, because of the people, the schools, the quality of life. “We identified this opportunity in late 2019,” he says.  “I saw there were six lots for sale on HAR, so we approached the seller to ask about buying the land.”

The project had six unfinished townhome lots. Hurricane Harvey expanded the supply of lots in the area as older housing stock was flooded and subsequently demolished.

“They wanted to get rid of the property after Harvey,” Qiao says. “Part of Bellaire had flooded, so the market was not very strong. We said, OK, there is good opportunity, something we can help with in the community, so we bought it at the end of 2019. We started right away, did the basic calculation, the costs and the anticipated rent. The numbers worked, so we just moved forward.”

He says the project took a longer time than planned due to several factors. For example, he says the permitting process took 4 to 5 months. “During the pandemic we didn’t slow down,” Qiao recalls.  “When we started, we didn’t expect the market to be as hot as today. “

Beijing to Bellaire

Qiao was born in Beijing and he has worked in the upscale condominium business in Asia. And US real estate has been very appealing to international investors in recent years.

“Our business starts from international investors,” Qiao explains. “Three years ago, no institutional investors understood the nature of this business.  They were asking questions like, “Is it multi-family?” We saw a huge demand from people who want to have another option besides buying in order to live in new homes. They want this kind of flexibility. At the same time, we saw a huge demand from international ambassadors to have tangible assets in US. We bridge the demands.”

What is the origin of the “Wan Bridge” name?

“The name Wan Bridge comes from Mr. Bin Wan, one of co-founders and the name Bridge comes from another partner called Bridge Tower, so we combined,” Qiao said.

“We invested a lot at the beginning to do it right,” he says. “Once we reach a certain point in the market, it’s like cookie cutters. The power for us is to use same floor plan, the same construction drawings to control the quality of the product and the cost of the construction.  It is most important for property management to operate in long run. “

“All those kinds of operation need to be designed properly at the beginning,” says Qiao. “This is different from other for sale builder’s product.  Once we have this mentality in place, we design a home from inside to outside. Every inch of space needs to have function.  Every inch needs to generate rent dollar.  There is turnover to make it ready for next move in.”

The Master Plan of Wan Bridge’s Ambition

Qiao recaps his big plan for Houston. “We started our Build to Rent and property management business in 2019. We acquired another site in Dallas, and we started in Austin this year, and now have 39 projects in our pipeline.

Ting Qiao. Photography by Emily Jaschke http://photographsbyemilyjaschke.zenfolio.com

“Over the next five years, we want to become the biggest in the market. It is very important to have three components vertically integrated in our houses – the land development, the construction and property management all together. We will be the builder, we sell to other for-sale builders, and we’ve been working with Land Tejas, the biggest lagoon community, so we have those projects going.”

“The employees name the developments. We also have our own home building business with very well -designed floor plans. It is very efficient, also for our investors, in the long run to have the best construction team,” said Qiao, who was late for ribbon-cutting ceremony of Wan Bridge’s opening of the upscale patio home development.

In selecting locations, the operative word for Wan Bridge is “near.” In other words, high-growth suburbs near the major metropolitan areas of Texas.

Qiao says he focused on suburban locations with good retail services, strong school districts and high demand for housing. He says his homes in The Oaks at Suncreek Estates near Rosharon have a game room, four bedrooms and look like a $500,000 custom house. The only difference is they are for rent at $2,700 – $2,900 per month.

A National Trend – Build-to-Rent Single-Family

Wan Bridge is not alone in pursuit of the BTR niche. Builders such as Camillo Properties in Houston and and Christopher Wood Communities in Arizona have tapped into the burgeoning sector.

Todd Wood, founder of the resort Christopher Wood Communities in the Phoenix area, says owning a home has always been the American Dream and probably always will be. But the numbers tell a different story, according to the U.S. Census, 65 percent of renters are under age 35, Wood said in a CNBC interview.

The Wall Street Journal’s Hunter Housing index predicts that more than $40 billion will be invested in the Built-to-Rent market over the next 18 months.

In a separate breaking news report on Tuesday, the Wall Street Journal quoted sources saying that Blackstone Group  has agreed to pay $6 billion to acquire Home Partners of America, which owns 17,000 rent houses across the nation. Blackstone is paying all cash.

The Grand Slam by D.R. Horton

In April, the Wall Street Journal reported the now-famous anecdote of the new Amber Pines at Fosters Ridge Ridge subdivision in Conroe, north of Houston. The builder, D.R. Horton, built 124 homes there and rented them, then put the entire block up for sale. Major investors surged to the opportunity, which eventually was acquired by Fundrise LLC for $32 million. The price was about twice as much as D.R. Horton could have received in traditional one-by-one sales to individual home buyers, the Journal reported.

According to real estate advisory firm RCLCO, around six percent of new single-family homes across the United States are purpose-built for-rent. That’s up from 5.2 percent in 2010 and 5.8 percent last year. More than 7,500 houses have been built for the rental market across Houston area neighborhoods, according to RCLCO. It projects demand could exceed the 700,000 build-for-rent dwellings expected to be constructed over the next decade.

Rent Houses for $7,500 a Month, says David Jarvis 

David Jarvis, senior vice president with John Burns Real Estate Consulting’s Bellaire office says the build-to-rent movement is a very real space that is gaining momentum.  “It’s been around 10 years and has been getting more and more prevalent,” says Jarvis. “For the people who want to live in a new single family, less dense property that is professionally managed, these are a good fit. The professionally managed part is a big attraction.  These communities are well maintained and are more high-end than a Class A apartment. The broad brushstroke attracts a customer aged 25 to 55, and in this larger percentage of clients, many have children, the lifestyle with almost no maintenance is very attractive. And there’s also an over-55 crowd that appreciates the no-maintenance factor.

“We did a recent national survey and 54 percent of these BTR renters said they were on their way to home ownership, but just were not quite ready,” says Jarvis.

“In Dallas, Greystar’s Elan Inwood, south of the Galleria in Dallas offers single-family homes renting for $7,500 a month.  They have 2-3 story townhomes that are $3,500 a month.”  It comes with some extras, like a community dog park, a tech lab, boutique swimming pool and 24-hour fitness studio.

In a presentation Jarvis shared last week, he noted that in the fourth quarter of 2020, rental rates rose 4 percent and home prices soared 11 percent.

Renters By Choice

Building is big business in Houston, which has been ranked as the most active home building market in the nation. But thanks to Wan Bridge – and its colleagues in the BTR sector – the dwellings’ occupants aren’t American Dreamers with a 30-year amortization schedule. They choose to rent.


June 22, 2021 Realty News Report Copyright 2021


For more about Texas real estate, check out the book Houston 2020: America’s Boom Town – An Extreme Close Up  by Ralph Bivins. Available on Amazon  http://tiny.cc/4a2g6y  

Houston 2020 Ebook version  https://tinyurl.com/4xm7z8b5   


Image: Courtesy Wan Bridge. Emily Jaschke.


File: Build to Rent Boom