Director of Investment Sales and Strategic Partner Bobby Stamps and Managing Principal Brad Cooper with Blue River Development join the Atlanta Real Estate Forum Radio podcast to discuss the build-to-rent market and rising interest rates. Stamps and Cooper join host Carol Morgan in the All About Real Estate segment.

Cooper has been with Blue River Development for 22 years with his partner and brother, Michael Cooper. After working in the Atlanta music industry for several years, Stamps decided to transition into residential sales and joined Cooper at Blue River Development four years ago.

Cooper said, “I have been doing this for 22 years and plan on doing it for another 22 years!”

Blue River Development provides land origination, development and banking for national home builders, regional builders and single-family rental funds and operators in nine markets across five states.

Although the past few years saw agreeable interest rates and a booming market, the economy is changing fast, causing many home builders to halt or slow production. Blue River Development assesses supply and demand imbalances differently now compared to the 2008 recession.

With an influence on several aspects of the home-building industry, rising interest rates have a particular effect on the build-to-rent market. Directly clashing with the finished product price, individuals are starting to see the return on cost change from the typical 4 to 5% to more than 6% in most cases.

Many builders unable to take a big hit provoked a more creative deal structure approach. In order to adapt to today’s fiscal environment, builders are beginning to hop on the bandwagon of becoming fee builders.

Cooper said, “Builders have little to no financial risks in this scenario, and it has become an important revenue stream.”

Build-to-rent groups are more selective on products and pricing, offering fewer deals in tertiary markets. In the past, Blue River Development has sold deals and lots to American Homes for Rent and other build-to-rent groups that handle their own vertical construction. After sparking up a deal between Haven Realty Capital and Davidson Homes, Stamps prioritized immersing himself within the build-to-rent space. As land developers, the company is well-versed in deals, builders, products, lot sizes, zoning, surrounding schools and more, making Blue River Development perfect for pairing home builders with build-to-rent groups creating successful deals!

Stamps said, “We did all we could to network and stay ahead of the curve to gather the intel from all the main players in the build-to-rent game.”