NEWS: A new foundation

ARTICLE FROM THE KANSAS CITY BUSINESS JOURNAL, By Syndnie Savage of KCBJ. Photo by Jim Barcus of KCBJ.

Link: https://www.bizjournals.com/kansascity/news/2026/09/25/sallee-tyler-build-to-rent-housing-homeownership.html

Randy Sallee started his company in 1989 building entry-level houses. The focus on providing more affordable housing options remains. But the company has grown and evolved in many ways under Randy’s son and now CEO, Tyler Sallee.

The Lee’s Summit family business has become an area leader in the growing build-to-rent market. It sold a package of its projects last year for $113 million. With a streamlined name and accomplished executive team, it now is busy with new projects throughout the metro area and beyond.

In July, Sallee Development changed its name to just Sallee. Tyler Sallee said the move signifies that the company’s current work is a departure from its past.

“We’ve got projects in almost every corner of Kansas City right now,” Tyler Sallee said. “We’ve been able to expand into some submarkets we’ve had on the list for a while: North Kansas City, Gardner, Lee’s Summit.”

A crisis and a pivot

Roughly 90% of the company’s portfolio was made up of for-sale single-family houses when Tyler Sallee joined in May 2008. The subprime mortgage market’s collapse and wider financial downturn it triggered forced then-Sallee Development to get into building for-rent townhouse projects.

“To have that for-rent product and see just how resilient it was during that [time] I think is really what probably turned our focus into ‘Hey, we need to be doing more of this,’” Tyler Sallee said. “Once we started doing more of it, it became a huge focus for us.”

Build-to-rent (BTR) neighborhoods are planned developments that include single-family houses or townhouses that are held long term and rented to tenants. Sallee has developed more than 4,000 BTR units in the Kansas City area, targeting renters priced out of buying.

“Today, that really makes up 90% of what we do,” Tyler Sallee said. “We still do a little bit of single-family lot development for builders, but the primary focus of the business today is purpose-built for-rent communities in Kansas City.”

BTR neighborhoods have surged in popularity nationwide in recent years as house prices have shot up and interest rates increased. The market recently dipped nationally, but activity in the Midwest remains strong.

About 11,000 more units broke ground in the Midwest in 2025 than in the previous year, according to a March report from Northmarq. The Midwest accounted for 17% of the national total in 2025, up from 11% in 2024.

Johnson County holds the metro area’s largest number of BTR units, accounting for about a quarter of inventory, according to Northmarq.

The affordability gap

As the cost of homeownership continues to rise, Sallee’s BTR communities target the “missing middle,” a group of middle-income people who rent and struggle to bridge the financing gap to buy a single-family home.

“The gap between what that costs, going from for-rent to for-sale, used to not be nearly as dramatic as it is now,” Tyler Sallee said. “Now, you are coming out of an apartment to get into an entry-level or starter home, and they’re $400,000. By the time you add in a mortgage payment, taxes, insurance and all the upkeep on it, the gap is just tremendous.”

Higher rents and escalating home values have further widened that chasm. The average wealth gap between homeowners and renters surpassed $1.37 million in 2022, according to an analysis of Federal Reserve data from the Urban Institute. The median age of a first-time homebuyer now is 40, according to the National Association of Realtors’ 2025 Profile of Home Buyers and Sellers.

A large portion of Sallee’s tenant base is young families with children in elementary school or junior high.

“The same type of client that we were selling entry-level homes to in the ’90s and early 2000s are essentially the same people that we are serving today with our townhome product,” Tyler Sallee said.

Balancing competitive rents

The company collects market data in cities where it wants to develop, aiming to have for-rent townhouses marketed for 25% to 30% below what a mortgage payment on a similar-sized area home might be, Tyler Sallee said.

The $69 million Flint Trails development at 167th Street and White Drive in Gardner will offer two- and three-bedroom townhouses with an average footprint of about 1,400 square feet — each with an attached one- or two-car garage. The maintenance-provided units are expected to rent for about $2,000 a month when the first wave becomes available in spring 2028.

Last year, Sallee wrapped up work on Barry West, a 364-unit townhouse project between Missouri Highway 152 and Barry Road in Kansas City.

Construction is underway on a BTR community in Spring Hill. Hidden Hills will add 238 single-family houses and 96 maintenance-provided townhouses near 207th Street and Woodland Road. Sallee will build the two- and three-bedroom townhouses, which will range from about 1,260 to 1,400 square feet. It is working with Hakes Brothers⁠ to develop the single-family homes.

The real estate firm’s BTR portfolio also includes Rustic Heights, a 176-unit townhouse community built in Oak Grove in 2024.

“The average tenant stays with us two-and-a-half, almost three years,” Tyler Sallee said. “Our goal is for those people to get into homeownership. Homeownership is a good thing for families, I think it’s a good thing for everybody, and we hope that’s where everyone graduates to.”

Building a winning team

While it built its BTR portfolio, Sallee also has been building up the business for bigger things. It hired a team in the past couple of years with experience at well-known larger area companies.

• Spencer Yohn became COO in March. He joined in 2023 after a nine-year stint at Summit Homes, Kansas City’s third-largest homebuilder behind Rausch Coleman Homes and Sallee.

• Rebecca Hill joined in 2024 as CFO. She has been CFO with a run of local players: Mission Peak Capital, Summit Homes⁠, NRES Holdings and NorthPoint Development forerunner Briarcliff Development Co. Hill is a 2023 Kansas City Business Journal CFO of the Year honoree.

• Mike Kellam, executive vice president of development, joined in March after recently being vice president at Clarkson Construction Co. He was a KCBJ NextGen Leader in 2024.

• Adam Peltzer has led capital investments for Sallee since 2024. He previously was a portfolio manager and senior investment analyst at Tortoise Capital Advisors before stepping away in 2021 to form investment firm Hiram Capital Management alongside two other former Tortoise executives.

A record-setting deal

Sallee sold four suburban BTR projects totaling more than 500 units in September 2025 to a New York investment firm for about $113 million. The deal included:

• Chapman Ridge: A 146-unit townhouse development near Missouri Route 7 and Colbern Road in Blue Springs

• Traditions Townhomes: A 240-unit townhouse development near Mullen Road and 173rd Street in Belton

• Traditions Villas: An 89-unit active community for 55-and-older residents at Mullen Road and Sycamore Drive in Belton

• Bradley’s Crossing: A 52-unit townhouse community near 219th Street and Bradleys Parkway in Peculiar

All four properties were 92% to 98% occupied at the time of the sale.

“It actually was the largest BTR transaction in Kansas City history,” Tyler Sallee said. “That was a huge milestone. Some of those products we sold we had worked on for 10 years.”

The deal provided the capital to begin exploring other projects, including the company’s first BTR development outside the Kansas City area.

“We knew we were going to continue to build townhome projects,” he said. “We had this pretty substantial pipeline of projects that we want to continue to build. We thought that selling the current portfolio, taking the capital out of that and redeploying it into new projects lined up fairly well with the growth we have planned within our company.”