While much of the sector continues to be dominated by small owners/operators, its solid property fundamentals, credit tenants and low capital expenditures are beginning to bring in institutional money.

Trends indicate that there is still demand for quality assets and much of the cap rate increases we’re seeing are being inflated by inferior assets.

As the amount of troubled loans mounts, real estate lenders are revisiting strategies from the Great Recession to avoid taking back the keys on some assets.

With solid property fundamentals and plenty of potential demand, both institutional and high-net-worth investors have been working with firms that specialize in BTRs.

The “denominator effect” put institutions in a position where real estate allocations exceeded target levels, but observers expect that issue has begun to resolve itself as values of other investments have recovered.

Third-party surveys are often relied on for valuation purposes; however, one must be cautious in their use when actual trades in the public market are confirming a value that is substantially different.