Both the Fourplex Investment Group and Christopher Todd Communities have brought great build-to-rent developments to the market. We’ve seen them in the Phoenix metro alongside some of our projects. So what’s the difference between them and us? What are the pros and cons? How is investor ownership handled differently?
Most people that do a build-to-rent project have total ownership of the project itself. You are Sally, the investor, and you’ve built a duplex in your town in Iowa… You own that.
That’s an example of a build-to-rent deal on the opposite end of the spectrum.
What Are Christopher Todd Communities?
The national builder Taylor Morrison has launched this company called Christopher Todd Communities. They’re essentially a flagship of the build-to-rent concept and they do really nice communities.
Both Christopher Todd and the Fourplex Investment Group are active in the Phoenix metropolitan area. Within CT projects, they produce nice single-family, detached developments where somebody feels like they live in a home, but they are renting. It’s this kind of bridge between renting from a single-family landlord and living in a Class A apartment complex.
It’s sort of a hybrid model.
Christopher Todd is the owner of the entire community.
Fourplex Investment Group vs Christopher Todd
The real estate investment model that the Fourplex Investment Group (FIG) has implemented is a bit different. We build and develop our communities and sell the entire community off as individual residential multifamily units. For example, 30 different fourplexes. These projects end up being sold to doctors, lawyers, dentists, etc that all come in and they own their individual fourplexes directly.
This is different than if you invested in a Christopher Todd Community, right?
In their communities, you don’t get to decide when to sell. But if you own a FIG fourplex, you do. So the only way to maintain control over a build-to-rent community that has fractionalized ownership like what we do is through a homeowners association.
HOA is usually a dirty word in the ma and pa investor world. However, within a homeowners association, you are able to own the unit. You own the ground under it, you own the air above it. You can sell whenever you want/need to. You can encumber it. You can do all those kinds of things.
Investing in syndications—you’re at the mercy of the sponsor of the general partners. They are deciding (according to their PPM) what they’re going to do with this investment. And you, you have to abide by those rules. You can squawk and say, “I want to sell, I want my shares out.” Maybe they’ll indulge you, but they don’t necessarily have to…