Hot SFR sector of Texas: questions and answers with the Wan Bridge


Single-family rentals or built-in communities for rent appear to be the answer to a demand for housing that has grown dramatically over the past 18 months, bolstered by the new lifestyle brought on by the pandemic. The industry is booming, even surpassing multi-family, and Texas is particularly attractive for this growing niche, with Austin, Houston and San Antonio among the most sought after markets.

As expected, the investment community has started to pump billions of dollars into this new opportunity. Among them is Wan Bridge, a Houston-based company that has been building and operating SFR communities statewide since 2016. In mid-October, the company announced a multibillion-dollar equity inflow that will materialize. in 30,000 SFR homes in 50 Texas submarkets. in the next five years. More information on the evolution of the industry and Wan Bride’s plans in the interview below with President and CEO Ting Qiao.

READ ALSO: SFR still has “a lot of leads” before slowing down

What attracted you to the single-family rental industry?

Qiao: We entered the SFR sector because we saw an opportunity to transform what has been a relatively stagnant industry. And with the COVID-19 pandemic, consumer preferences have changed, accelerating demand years in advance.

Specific to the single-family rental industry, when Wan Bridge entered the SFR industry, it was not yet considered an asset class. I had experience in the multi-family and hotel sectors, but I noticed that the service aspect was lacking in the SFR sector. Not to mention that the market was fractional, with fewer institutional and dominant players than other sectors of the industry. Even today, institutional players only occupy 3 to 5% of SFR’s market.

Our team recognized an opportunity and felt that SFR could be the next big opportunity in the real estate industry. It turns out that SFR has become one of the hottest markets recognized by Wall Street.

You arrived in the United States in 2016, what attracted you to Texas?

Qiao: First of all, Texas is known for its hospitality and friendly people. Second, Texas has seen – and continues to experience strong population growth and strong job growth, and is also home to many Fortune 500 companies. Despite this growth, real estate prices in the state are still affordable by. compared to many other states.

Additionally, the rent-to-value ratio is significantly higher than in other states like New York and California. This made Texas a great place to launch the unique concept of Wan Bridge rental construction, as high cash flow generation was crucial.

Which SFR rental classes are most in demand in Texas?

Qiao: While townhouses are an important feature of Wan Bridge’s product offerings, demand varies and is location specific. We aim to create a product that will be successful in the community location based on our extensive research and industry knowledge.

Our team is thrilled to have the opportunity to expand Wan Bridge’s services into an already diverse product line that ranges from full-size homes and posh townhouses to lakeside residences and beach homes. To achieve this, we’ve forged strong relationships with planned community developers like Land Tejas, who have already seen the unmatched value we’ve brought to the table.

Looking at the SFR industry from a demand, design and legislative perspective, how has it evolved since you came here?

Qiao: Demand has continued to increase significantly for single-family rental products since Wan Bridge made it their mission to deliver a differentiated residential experience to a wider population.

When it comes to design, our team continually evolves and improves the design of our products based on the latest trends and resident feedback. Overall, residents can expect upscale style with functional layouts and practical features, including open-plan floor plans, high ceilings, and contemporary designs for a true mix of form and the same function they would want if they were to buy a house. For the sake of durability, our homes feature energy-efficient double-glazed windows, extra dense insulation and high-performance appliances.

Tell us about your recently announced plan to build 30,000 SFR homes over the next five years.

Ting Qiao, President and CEO, Wan Bridge. Image of Emily Jaschke

Qiao: This influx of capital is a milestone for Wan Bridge. With him, we have ambitious plans to enter Texas’ top 50 submarkets by building 30,000 homes primarily in the suburbs of major metropolitan areas in Texas over the next five years.

This investment will significantly advance Wan Bridge’s goal of continuously transforming the residential rental market by developing unique, quality rental construction products with a focus on well-being in its communities in Austin, Dallas and Houston as we initiate more developments and cultivate additional partnerships in the near future.

It is also a testament to our innovation and our desire to revolutionize the way our communities demonstrate the well-being of the physical aspect such as hiking trails and fitness centers from pavilions to wellness services such as pediatric care, physical sports clinics and vaccination services directly in the community pavilion.

How are you dealing with the woes of the pandemic – rising prices for building materials, labor shortages, social distancing measures, etc. ?

Qiao: Diversifying our sources is the key. Working with multiple vendors is essential for all of your business needs, not only during a crisis like this pandemic, but in a consistent manner, so that you can be prepared for the unexpected. Wan Bridge maintains strong relationships with industry suppliers and contractors. We believe in treating contractors with respect in order to maintain strong relationships. So when tough times strike in the industry, you can count on them to get you through.

Additionally, as projects neared completion and the COVID-19 pandemic rocked the world, we were forced to act quickly and be flexible to make the necessary adjustments to keep construction on track. . Many employees felt uneasy about losing their jobs, with contractors asking the same worried questions.

However, we did not stop construction for a day. Construction was considered essential by the state of Texas, so the team stepped up, implementing new safety protocols to ensure the health and safety of employees. This has also enabled us to meet our purchasing commitments on time with our partners.

The company has taken the greatest possible precautions in providing PPE to every employee on the site. Wan Bridge also found it important to provide and donate PPE to first responders who continued to work in the surrounding community. All of these measures have helped Wan Bridge retain all employees, alleviating some financial burdens that have rocked many people across the country. In fact, the continued construction of the business has created additional job opportunities and the projects are completed on time.

READ ALSO: Building in the time of COVID-19

How are Boomers different from Millennials through the prism of SFR?

Qiao: In Wan Bridge, 85 percent of our residents are Millennials, while 15 percent are empty nests, according to internal polls. However, our homes are designed for everyone, not just one demographic. A trend due to current real estate market conditions is that many consumers are choosing to rent rather than buy, with many younger residents wanting to live in the moment, so to speak, rather than being tied down by ownership and an estate. mortgage.

One of the main mantras of Wan Bridge is that residents don’t have to own to call it home. We believe our communities occupy an important niche for those who prefer to rent while retaining the luxury and spaciousness of the property and other time saving benefits of apartments such as landscaping and maintenance services.

Many say that the exceptional performance of the SFR sector since the start of the pandemic is hardly sustainable. How do you see the industry evolving over the next 12-18 months?

Qiao: Demand remains well above supply and we expect this to continue for the foreseeable future. With a hot market and low inventories, proliferated by the pandemic, the current housing shortage in Texas makes building communities for rent virtually essential to meet demand. The single-family rental industry, and BTR in particular, is not a fad.

As the state’s population continues to grow, Wan Bridge wants to be part of the solution to ensure there is enough housing to support our communities. Currently, the supply is not sufficient to meet increased demand. We have continued to fill our pipeline by purchasing land since 2020, aiming to usher in 20-30 new build communities for rent in suburbs of Houston, Dallas, and Austin over the next 12 months.

Should you expand into a market outside of Texas, where would it be?

Qiao: We have no immediate plans to expand beyond Texas. However, the sky is the limit and this commitment to fairness is a point of proof of the demand for this type of real estate, and we don’t see that changing anytime soon. While we are currently committed to expanding into Texas, where we want to solidify our position as the premier rental single-family home construction company, our team hasn’t ruled out expanding to other states.

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