NASHVILLE, Tenn. (WTVF) — Nashville's housing market is booming.
So is the Build to Rent industry, which is fueled by Real Estate Investment Trusts, often called Wall Street investment firms.
These firms are flush with cash, and are buying land then building entire rental home communities.
People in one Antioch neighborhood feel blindsided.
They supported a new development at 3612 Butler Road after being told it would have more than 50 single family homes for sale.
But then an out of state Real Estate Investment Trust bought the land and changed the plan.
American Homes 4 Rent is now building 50 single family rental homes instead.
It has some questioning whether current laws are enough to protect neighborhoods.
Parker Kirby recently bought a home in the Antioch area after trying to find a home for nearly a year.
"We went above budget and above asking price," Kirby said about the home he bought.
"Absolutely love the house and really love the neighborhood," Kirby said.
On recent walks with his dog he started noticing an entire new neighborhood being built near him.
"It's honestly like a new frame a day. Now that there are multiple frames, we are seeing siding and different types of progress," Kirby said.
He naturally thought the new homes would be for sale soon.
But it turns out this is different - it's an entire neighborhood of homes for rent.
It's being built by American Homes 4 Rent, a California based Real Estate Investment Trust.
They're building more than 50 single family, rental homes, which is not what people in Parker's neighborhood thought they were getting.
"It's a bait and switch to the neighbors," said Metro Council Member Tanaka Vercher who represents the district beside the neighborhood.
Vercher said people in Parker's neighborhood thought they were getting homes with large front porches, and they thought the new homes would be owned by those who lived in them.
But instead they are getting rental homes, what some compare to an apartment complex.
"We know what transitional communities look like. It's one of the reasons many neighbors out here don't want any more apartments," Vercher said.
So how did it happen?
Back in 2017, both the Metro Council and the Planning Commission agreed to rezone a prime tract of agricultural land to allow for single family homes.
In 2018, the Planning Commission approved a concept plan from the developer who showed pictures of the homes he planned to build.
But in 2019, the developer sold the land to American Homes 4 Rent, which is now building rental homes on the property.
"This development when it changed hands it should have come back before the Planning Commission," Vercher said.
But the Planning Commission said rental homes are still allowed within the zoning plan.
Rental homes are Single Family, Residential.
It does not matter if the homes are owned by an out of state corporation that chooses to rent them out.
The Planning Commission said it does not require a new public hearing when land is sold.
Tennessee State University professor Ken Chilton has studied the rapid growth of Real Estate Investment Trusts in middle Tennessee and across the country.
"It looks residential but actually is going to be a purely rental community. I consider that a bait and switch," Chilton said.
He said a big problem is our zoning laws are outdated.
"I believe our zoning codes can't really differentiate what these companies are doing," Chilton said.
Real Estate Investment Trusts used to buy single homes in neighborhoods, but home owners associations fought back to make that harder and there is now a lack of supply.
So they are buying land, getting it rezoned, and building entire rental home communities.
"The issue is transparency. Residents need to know what's being proposed in their community," Chilton said.
American Homes 4 Rent has other rental home communities in Davidson County.
And large rental home communities from other Wall Street companies have popped up in Fairview, in Rutherford and Wilson Counties.
Overall Real Estate Investment Trusts own more than 7000 homes in Middle Tennessee according to Chilton.
"I am worried with the current policies we have on the books, I am overly worried this will happen more and more," Vercher said.
Parker Kirby said he is not against rentals - he just wants a community where people can live long-term and build wealth together.
"I want somebody who's coming in here to start a family and set down their roots, and not try to make ends meet paying high rent," Kirby said.
The Planning Commission said it is not unusual for property to get rezoned and then sold.
American Homes 4 Rent sent the following statement when we reached out to them about this story:
"Nearly one in three American households already leases the place they call home and American Homes 4 Rent is proud to be the leader in creating a new and superior choice. In an undersupplied market, we are providing beautiful single-family rental homes in vibrant, well-located neighborhoods.
The homes in our newly constructed communities like Bluewater Point in Antioch are built in a similar style and according to the same standards as homes for sale. However, our homes have the added benefits of lawn care and various other amenities. We are dedicated to building quality single-family home communities in compliance with all applicable architectural and zoning requirements.
While we were not involved in the early rezoning discussions that the original developer might have had about the land, we are committed to providing Nashville area families with a terrific new housing choice that combines all the benefits of single-family living with the flexibility and low-maintenance lifestyle of leasing. We launch promotional and marketing campaigns, including a dedicated webpage, to inform current residents about the types of communities that are coming to their neighborhoods and Bluewater Point is no exception."
