Why Investors Like Build-to-Rent

With home prices soaring 20 percent in 2021, according to CoreLogic, the median home price in the U.S. is over $400,000, yet the median household income is less than $80,000. Mortgage interest rates are also climbing significantly. With build-to-rent (BTR housing) investors and developers can capitalize on filling the country’s housing gap through single family community rentals. In 2021, an estimated $45 billion was invested in the single-family rental space by institutional investors, REITs, and investment banks.

You can read more on build-to-rent investment trends and outlook here.

According to the National Rental Home Council, there are 860,000 more rental households in the country today than there were two years ago. Around 51 percent of the current single-family rental stock was built in the past five years alone. Though, the BTR market only comprises one to two percent of the U.S. apartment market. The nation’s largest apartment developer and manager, Greystar, has 3,500 BTR homes, boasting an occupancy rate of 96 percent.

Single-family rentals are often located in places where there is less presence of apartments. BTRs are seen as a more reliable source of income as a single buyer will purchase an entire BTR community who agrees to take ownership upon completion. Regarding for-sale homes, there are several individual homebuyers investing years ahead of time. As for those who cannot afford to purchase homes, families still need housing with two to three bedrooms, which is very limited in apartments.

BTRs appear to be the solution to many problems. The biggest complaints about renting an apartment are limited space and no backyards, and neither exist in BTRs. Additionally, single-family rentals are ideal for pet owners, offering more space than a dense apartment. BTRs are increasingly becoming the new starter home as it helps renters learn more about what goes into maintaining a home, like HVAC filters, changing light bulbs, or plumbing issues.