In July, 2023, Welker Properties, a vertically integrated multifamily development company, announced a $95mm development in Melissa, TX. The project, named "Wolf Creek Farms Melissa Build-to-Rent (BTR)", will bring 343 SFR units online in the market. The 32 acre site will see construction start in Fall 2023 with completion expected by the end of 2025.
Featuring amenities such as private yards, a resort-style pool, dog park, fitness center, resident lounge, open courtyards, and built-in Wi-Fi across both common areas and individual units, the luxury development hopes to capitalize upon the expansion of The Metroplex's urban sprawl. Andrew Welker, founder and CEO of Welker Properties, spoke to the plan:
In the past 10 years, Dallas-Fort Worth's population has increased by more than 20%, creating an increased need for housing. This project is designed with best-in-class specialists to create a community that optimizes resident satisfaction across generations... Luxury BTR communities are emerging throughout the United States, especially in the Sunbelt markets. As these areas increase in popularity, we are proud to prioritize BTR communities that provide residents with high-quality living and the opportunity to experience everything Melissa has to offer without the long-term commitment of homeownership.
Luxury BTR has certainly seen strong growth in recent times. Welker is likely hoping Melissa experiences the explosive growth it has enjoyed in the past decade. Considering the total project cost of $95mm (~$277,000 per unit), they must feel confident the town of ~17,000 will grow to absorb the luxury product. Melissa's 2020 median individual income of $53,186 is not unlike its neighbors, but the city's current size may cause concern when it is time to lease out the units.
Additionally, the BTR trend may lose steam as new supply reaches the markets and mortgage rates drop. Given a $300,000 home, a 30-year mortgage with 20% down at a 7.00% rate results in a monthly payment of $1597. At a 5.00% rate, that is down to $1288 -- an almost 20% reduction. Prospective homeowners may be embracing BTR as a temporary solution given the current interest rate environment. Beyond interest rates, time will tell if BTR communities are able to form the same intangible "neighborhood feel" that is developed from owner-occupancy.