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Investing In Build-to-Rent Properties: What You Need To Know

Investing in Build-to-Rent Properties: What You Need to Know

More Americans today are renting than at any time since 1965, leading to a shortage of affordable single-family rentals (SFRs) in the country’s hottest markets. Builders are stepping in to solve the problem with build-to-rent (B2R) communities, often consisting of luxury single-family homes in A to B sub-markets close to shopping, with good schools, parks, and other amenities nearby.

In fact, one in 20 new single-family homes were built to rent in 2018. Investors can take advantage of new construction in master-planned communities, enjoying the benefits of having their SFR properties clustered in the same neighborhood, new-home warrantees, and even home builders willing to take on property management tasks after construction is complete.

Indeed, newly built SFR communities can net hefty profits for investors. Tenants may pay as much as 15 to 30 percent more for new SFRs than they would for comparably-sized apartments or existing SFRs in other neighborhoods. B2R properties show an average stabilized occupancy rate of 96 percent, which makes B2Rs a good move for investors.

What Renters Look for in New SFRs

Today’s SFR customers tend to be millennials who can buy a home–but choose not to. They want the space and privacy of a single-family home, with the convenience of a rental. Average SFRs range in size from 1,400 to 2,000 square feet, with luxury rentals going up to 2,800 square feet. Most B2R homes have at least three bedrooms and two bathrooms.

The communities often include the same amenities renters expect in multi-dwelling complexes, including a gated entrance, swimming pool, dog park, and walking trails. Consider adding services such as 24-hour maintenance, landscaping, snow removal, and housekeeping to appeal to renters who may also be considering an apartment unit with these amenities.

Desired features within many such homes include 9-foot ceilings, which can make smaller spaces look bigger, durable laminate wood flooring, granite countertops, and stainless steel appliances. Upscale properties can benefit from the addition of a kitchen island, walk-in closets, and dual vanities in the master bathroom.

Prep for Success: Partnering with Builders

Connecting with builders before construction is complete gives investors the opportunity to customize homes—although it may be wise to lean on the knowledge of the builders, especially if they have undertaken similar, successful projects in the past.

By partnering with a builder during the construction phase, you can create buzz about the new community and even sign tenants who will be ready to move when their current lease expires.

Investing in newly built construction carries fewer risks, but you could miss out on profitable properties if you don’t have quick access to funding. Line up your financing in advance and be ready to close as soon as construction is complete to reap the rewards of the growing B2R trend in 2019.

Cash In On the Growing B2R Trend with Fast Access to Funding: Borrow Better with 5arch today!



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