As potential homebuyers wait for prices and mortgage rates to recede, an Arizona company is moving in to fill the void by buying and renovating rental homes that offer an experience similar to a traditional for-sale subdivision.
Tricor, based in Scottsdale, has constructed or renovated 22,000 rental homes since 2014. It completed 2,600 last year. The firm operates in 10 states and is licensed as a general contractor in 17.
"We just have a lot of traction in Texas," said Joel Thomas, vice president of construction for Tricor, adding that investors still see the need for housing in the Dallas-Fort Worth area. "There are people who are moving to Dallas regularly, and even if we're thinking it's slowing down a little bit, the pace is still outpacing new construction or available units for rent."
Tricor has been active in the Dallas-Fort Worth area for about three years but has been working out of trailers on job sites. It plans to open its first North Texas office in Addison next month. The company now has close to 300 homes in the works set to be complete by the fall across two communities in Dallas-Fort Worth, and it has about 1,000 homes in the pipeline in future communities that could break ground soon.
"Even though the housing market has slowed down and there's major uncertainty, the build-to-rent industry people are jumping in and moving," Thomas said. "It's really interesting."
Tricor's clients range from small businesses that own maybe 100 homes to institutional investors funding hundreds of millions of dollars in new construction.
Thomas said the firm has even renovated homes for for-sale builders, including a public builder in North Texas, that have been selling entire communities of hundreds of new homes to rental investors, adding that those kinds of deals were especially "gangbusters" at the beginning of 2022.
Now, institutions are cautious as they speculate about whether they're getting the best price on homes now or if they could get a better price in six or eight months, Thomas said.
"Everyone's waiting to see what's going to happen in 2023,″ he said.
Tricor is constructing the first 230 units of Carmel Villas, a community in Denton along Interstate 35E at Pockrus Page Road that will eventually have 400 townhomes. The townhomes will have two to three bedrooms and an average 1,200 square feet.
South of Dallas in Lancaster, the company is underway on the first 65 detached single-family homes of a community called Boardwalk, east of the intersection of North Houston School Road and Cedardale Road. Each home will have four bedrooms and 2,000 livable square feet. When complete, the community could have up to 100 homes.
The firm also will break ground in January on Westridge Oaks in New Braunfels, a city along Interstate 35 between Austin and San Antonio. The project will include 193 single-family rental homes and is set for completion by early 2025.
Tricor is developing and building the two Dallas-Fort Worth communities for two national rental funds, which Thomas declined to name. Those investment firms own the land and fund the projects.
"There's no institution that doesn't have Dallas in their top five [metro areas] that they look at," Thomas said.