When Steadfast Income REIT closed on two recent deals, it tipped the scales of its portfolio to more than $1 billion in assets.
The acquisitions pushed the REIT's portfolio to more than 47 communities across 11 states—signifying rapid growth since its first purchase in August of 2010. The group is focused on value-added properties and investments, says President Ella Shaw-Neyland.
BriceGrove Park is the fourth Columbus-area property the REIT has bought. Shaw-Neyland says the metro area has great appeal because of job growth, which can happen a little more rapidly, and have more of an outsized effect, in secondary markets.
“If you’re in the Sexy Six coastal cities, it’s hard to drop a large factory, distribution facility or manufacturing plant in those cities,” she says. “Columbus has the second largest office for JPMorgan (Chase) behind New York City.”
In addition to brightening job prospects, the Millenials moving into these markets are also likely to rent for longer periods of time, rather than purchase a home.
“There’s a generational shift,” Shaw-Neyland says. “They’re not looking at apartments (for transition). They’re picking apartments as a lifestyle choice.”
Retreat at Hamburg Place in Lexington, Ky. was renamed after being purchased from Watermark Residential. The 150-unit property is the ninth property the group has purchased in Kentucky.
“The majority of our apartments have recovered all the jobs lost during the Great Recession,” Shaw-Neyland says. “We’re in strong markets that didn’t go down as far, so they don’t have to dig out as hard.”
One of the Steadfast's key strategies is keeping competitive rents in these markets: The average rent throughout the portfolio is about $907.
“That gives us the competitive edge to attract people who are making between $45,000 and $75,000 (a year salaries),” she says. “At that cost per month, it makes sense for them.”
However, the recipe for success was smart planning coupled with a little bit of luck, Shaw-Neyland admits.
“Our timing was really good,” she says. “We didn’t have any legacy assets and we started to buy at the right price.”
Lindsay Machak is an Assistant Editor for Multifamily Executive. Connect with her on Twitter @LMachak.