Build-To-Rent Model Continues to Expand
2 min read, By May Galan, SVP Association Management
Single-Family Rentals (SFRs) have been around since the start of the Great Recession a decade ago when large institutional players bought up cheap homes en masse, turned around fixed, and rented them. Today, these same and some new large institutional investors have pivoted and set their eyes on Build-To-Rent Communities (BTR). BTR Communities offer investors more accessible property management options, centralized locations, newer homes, lower repair costs, and ultimately higher rents. Developers are also finding it easier to take on Build-To-Rent projects because the developments often occur in smaller locations, giving them more control over the quality, style, layouts, and options it needs to provide. As a result, developers are building, and investors are buying these BTR Communities and getting great returns.
Single-Family Rentals and Built-To-Rent Communities are more attractive to those who may prefer larger living spaces and yards over traditional apartment living. The difference between the two for investors are scattered locations versus centralized locations, older versus newer homes, and higher versus lower repair and maintenance costs. The difference between the two for renters is single-family living versus community living and having an offsite manager that often is hard to get a hold of, to an accessible property manager that is often onsite. SFR and BTR communities are attracting renters with home-style living, maintenance services, and no-cost "home" repairs.
Renter's Expectations
BTR renters want the look and feel of home ownership without having to do it themselves. Most renters expect maintenance teams to be onsite to maintain the property. They also look for community-style living and expect amenities such as pools, playgrounds, and dog parks. That is why investors need to leave the property management job to qualified property managers who have the experience, tools, and knowledge to market, lease and manage these communities for them properly. The goal for investors is to listen to tenants' needs, which will help them stay longer and take care of the properties more like they were their homes.
Today's challenges, though, for developers and investors are rising interest rates and material costs, of course, and acquiring land. Homeownership barriers such as high-interest rates offset these challenges because the demand is there for these rental properties. The number of BTR housing projects will likely continue to rise over the next few years in the United States. This rise helps build more supply in the market for renters and stabilizes rents.
BTR communities are still a small percentage of the overall housing market. However, with the completion of some of these BTR communities in 2023 and 2024, renters will begin to see more options and supply in these markets.