Since the housing market crash, and even more so since COVID-19, the popularity of build-to-rent (BTR) single family homes continues to rise and multifamily investors have been joining in on the advantages that come with it. Arizona and Texas are at the forefront, but the country as a whole is seeing ten times the traction in BTR properties over the last ten years.
Many property management companies have added build-to-rent to their portfolio, especially in cities that are significantly growing in population. But why? Let’s dig into the history of build-to-rent and the benefits it brings for multifamily portfolios and their renters.
Build-to-rent properties are popping up in many suburban areas but especially in cities like Austin, Houston, and Phoenix, where populations are surging and land is widely available. With Millennials and Gen Z making up the largest portion of renters today, a shift has naturally occurred regarding the wants and needs of apartment living for this demographic.
With the addition of hybrid and work-from-home models since the pandemic, many sought out a place to live with more privacy and space at the same cost of living. However, many millennials are still unwilling or unable to own their own home, with high interest rates and rocky economic conditions deterring them from officially leaving the rental market. These realities naturally became the gasoline for the BTR market.
BTR properties bridge the gap for these renters as they produce a more sustainable and equally affordable option with all the benefits of living in a single-family home. Plus, many build-to-rent homes and neighborhoods meet the secondary and tertiary needs of millennial renters, such as a private yard, neighborhood pools, and designated parking. Essentially, BTR homes give millennial renters a taste of home ownership without the maintenance, high interest rates or taxes that come with it.
Baby boomers and even Gen X have also shown interest in renting BTR as many are selling their own homes to reduce maintenance costs; others have a desire to live closer to their children and grandchildren. Nonetheless, there is evidence of every generation renting BTR.
Renters aren’t the only ones who find the appeal of BTR properties. Investors and owner-operators are seeing the long-term benefits of creating more of these kinds of homes and neighborhoods. With build-to-rent, investments are much more scalable as new builds can be added with more ease than that of multifamily properties.
BTR real estate is also more likely to bring higher returns as they are designed and built for a specifically targeted rental market. This means vacancy rates are nonexistent at conception and few and far between down the line.
Since these are new builds, maintenance is more likely to be infrequent. Owners also have much more control over the properties in their design but also when it comes to future renovations to increase the value over time.
As more metropolitan areas grow in population, demand for BTR is expected to continue to grow for the foreseeable future. Due to the recent spike in the cost of capital and the overall availability of debt and equity, there is some slowdown in development expected. However, demand is still high and the outlook for these properties remains very strong. Many property management companies are investing in BTR, including customers of ResMan like Mark-Taylor.
"We’re proud to be early pioneers with this product class," says Dustin Lacey, Vice President of Marketing & Technology at Mark-Taylor, Inc.
With ResMan, adding BTR properties is just as easy as onboarding a multifamily property. And of course, the software is easy to learn and simple to use for any property manager, making an overall great experience for renters.
Interested in seeing how you can use ResMan for your portfolio and BTR units? Let’s chat.
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