For those of you in development, what's your experience developing for-sale products? It seems like if you're developing housing, multifamily rentals are faster to stabilize since the requirements to occupy are much easier to complete compared to approval and escrow process of purchasing. Also, being on the hook for warranty issues or any builder defects after sale, can feel like it could cost more just because of the legal matters associated
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Generally speaking, for-sale product is higher risk higher reward. In most markets, your potential profit from sales due to high housing prices is significantly higher than if you were to sell a rental project at stabilization. In some markets (Toronto, Florida, a few others), you can also use deposits from your pre-sales as part of your capital stack, lowering your equity commitment.
You can have a notably shorter hold period due to pre-sales in a strong market (most condo projects we've done are 100% pre-sold before we put a shovel in the ground, and from completion to closing it's like 3-6 months max vs. a 12-24 month lease-up period to stabilize a rental property). The flip side is, if you can't sell all your product quickly you may be stuck sitting on it, and as you said you have some additional risk for issues/defects after sale (generally 2-3 years).
Fact of the matter is, at least in Canada, rents just aren't high enough right now in comparison to construction costs to make for viable projects unless you're going to hold the asset indefinitely. Condo and other for sale product is where the profit is for merchant builders right now (although even that is slowing).
The other thing to consider in for-sale vs. for-rent development is your tax treatment. So long as you hold a multi development for at least a year after C/O, you receive capital gains treatment. For a for-sale development, you are treated as a "dealer" so you pay ordinary income tax.
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