The build-to-rent model has grown rapidly in recent years as demand for rental housing continues to rise across the US. Build-to-rent communities are purpose-built residential developments intended to be used as long-term rental properties rather than owner-occupied homes. Large institutional investors and property management companies typically finance and operate these communities. If you’re not familiar with the emerging trend of build-to-rent properties, here are the seven key things to know about them.
Rising Popularity With Millennials
Build-to-rent properties are often targeted at millennials seeking upscale single-family rental housing but who are not yet ready for homeownership. Millennials are generally getting married and having children later. Many carries high student debt burdens. These factors make renting more practical and affordable. Build-to-rent communities offer amenities like gyms, pools and clubhouses catered towards younger renters. Developers strategically locate them near urban job centers with strong millennial populations.
New Inventory Alleviates Shortages
Constructing build-to-rent communities brings much-needed new inventory to tight rental markets. Vacancy rates have dropped over the past decade, making rentals hard to find in many metro areas. The build-to-rent model delivers tens of thousands of new rental single-family homes and apartments. This additional stock makes rental housing accessible for more individuals, while dampening rapid rent hikes from short supply.
Institutional Ownership And Management
Build-to-rent communities are owned and operated by large professional management companies and institutional investors who retain long-term ownership. Major players include investment firms as well as prominent apartment REITs and property management corporations. These institutional owners have the capital and expertise to build, operate and maintain full communities efficiently.
Build-to-rent properties offer high-end amenities tailored to today’s renters that individual landlord properties cannot match. Standard features include stainless steel appliances, granite countertops, fitness centers, swimming pools, clubhouses, playgrounds and smart home technology. Some have additional perks like golf simulators, dog parks or coworking spaces. These resort-style amenities allow build-to-rent communities to command higher rents.
Build-to-rent developers proactively identify and acquire sites in desirable neighborhoods near major employment hubs. This locational strategy places rentals conveniently close to downtowns and knowledge economy jobs. Proximity to vibrant, walkable metro centers appeals to the target millennial demographic. Being near transit lines is another plus. Build-to-rent neighborhoods are thoughtfully woven into prime community fabrics.
Most build-to-rent projects encompass entire master-planned communities, not just single buildings. Neighborhoods contain a mix of single-family detached homes, townhomes and low-rise apartments built in a consistent architectural style with generous green spaces. This creates a vibrant community feel and brand image. Having ownership and management centralized for the full community also adds efficiency.
Compared to older existing housing, build-to-rent properties place greater emphasis on sustainable features that appeal to eco-conscious renters. Homes incorporate materials like low-VOC paints and carpets, ENERGY STAR appliances, programmable thermostats and high-efficiency windows to reduce environmental footprints. Community gardens, electric vehicle charging stations, and pedestrian connectivity also promote green lifestyles. Click on the link to learn more about build-to-rent pros and cons.
To Wrap Up
The build-to-rent model brings welcome innovation and new high-quality inventory into the rental housing sector. Understanding the factors driving its expansion and its defining characteristics allows renters to evaluate if build-to-rent communities may be a good housing option to meet their needs and lifestyle.