BTR Exit Strategies
Completely just thinking aloud here ,but this place does not typically castrate me for using it as an echo chamber.
Would it be too difficult/dilutive to contemplate an exit from a BTR community as for sale product rather than direct capping NOI/ assigning a per door figure that is supportable by comps? I understand BTR and for sale product differ ,but is the juice not worth the squeeze to align it during development?
Would it not simply depend on the sale value vs. the rental value?
Just put in some gradual capital events in the model and compare the sales returns to a single rent-capped capital event under a for-rent scenario. If the sales market is high enough and the rent is low enough, then sell. If the sales market isn't high enough and the rent is high, then rent and sell as an overall property.
I assume some of this analysis went into deciding to do for-rent houses instead of for-sale at the onset, but markets can change.
It could make sense but you need consider retail pricing on individual homes and saturating the micro market with for sale product simultaneously. It’s really no different than a condo conversion play in MF—is LT yield the focus, or residual value? You’ll likely have higher friction costs on retail selling.
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