The first suburban homes built for rent at Resimax include lawn mowing

Khair said rental yields were lower than they could be, but Resimax wanted to give itself the greatest choice for tenants who would stay in the property for several years, rather than leaving after just one year.

“We trade at about 5 percent of property value,” he said. “Between 4 and 5 percent. This could be much higher if we took a more aggressive approach. But we have our own price list and only select tenants that are suitable for the property.”

Resimax aims to have 500 homes in the BTR Fund by the end of 2025, with 30 per cent in Ennisbury and 70 per cent across the Wallan and Mirnda sites.

The fund, in which an overseas institutional investor took a “small” equity stake, would ideally grow, Kher said. The constraint was not demand, but the developer’s ability to secure more inventory.

“It’s about us being able to offer so much more in the short term. There’s no inventory available.”

BTR operators need scale to cover the additional costs required to provide amenities — such as mowing lawns — and the land costs associated with building a portfolio of detached homes are likely to be a hurdle, said Lee Warner, national director of residential research at JLL.

“The revenues are low — it’s a relatively low-margin operator — but to provide the amenities and services to make it attractive to an occupier, you need a lot of (homes) to be able to provide that amenity,” Warner said. . “You can’t spread this across fewer residences.”

However, it was not unheard of. In the United States, Lendlease operates independent built-to-rent properties, known as single-family homes. Low- and medium-density housing forms the basis of the armored personnel carrier industry in the United States, Warner said.

“Historically, their supply has been dominated by ‘garden stock’ — low- or medium-density materials,” he said. “Just in the last 10 to 15 years, apartments have been the majority of supply.”

Resimax’s rental homes are spread among the developer’s wider estate of homes for sale. This represents a difference from institutional-grade BTR portfolios, which need to group homes together, Warner said.

“It should be viewed as a BTR community, not just a rental within another community managed by a single owner,” he said.

“The BTR community must be sellable to another investor so that I can think of it as a BTR. A little of it cannot be within the estate. It must be a specific area and a specific APC estate or sub-area.”