The home building-to-rent model has been one of the fastest-growing segments of the US housing market since 2019, with demand from tenants and investors exceeding supply. Investors are attracted by the perfect combination of affordability, choice, and demand that build-to-rent homes offer.
If you’re an investor, learn more about the reasons you should look into this trend.
Shifts in Home Ownership to Rentals
The demographic groups, millennials and Gen Z, are the ones most likely to be renters. This is a combination of a high-priced housing market and crippling student debt.
As they grow older and start families, they’ll look for affordable homes. Since homeownership is out of the question for these groups, a viable alternative is renting single-family homes.
Low Maintenance Costs
Since the houses are newly built, they have lower maintenance costs. This leads to higher cash flow as well. Houses that are built well lead to lower maintenance and insurance costs for the homeowner.
Older properties might have more history and a better value in the market, but many investors have seen their investments go down the drain, when their final value is less than what it costs to fix it. New houses have all the latest amenities as well, which will attract more tenants.
A Rising Demand
Building to rent isa wonderful opportunity for you to gain some passive income. According to a CNBC investigation, rent for single-family homes in build-to-rent houses has grown 4.5% annually, while multiple-family homes grew only 3%.
The rising demand for rentals makes build-to-rent homes a profitable opportunity to invest in. As the houses become more expensive, a larger number of people choose to rent over buying. Build-to-rent is still a viable investment opportunity despite not passing “the 1% test”.
Low Tenant Turnover
Build-to-rent properties are typically houses that are rented out long-term. This leads to less stress and trouble of finding tenants, which automatically translates to a low tenant turnover.
Flexibility
Investors can have more flexibility in building rather than finding a property that already exists. This way, they have more control over what amenities can go in the property being built.
Lower Competition Struggle
The real estate market is becoming increasingly competitive. In 2021, people were left discouraged due to high market prices and low inventory. Even with properties being sold quickly, investors couldn’t find many options for investments.
If buying isn’t an option for investors, they should look into the profitable build-to-rent housing trend. First-time investors can also enter the real estate game with this. No need for bidding wars and other competitive struggles that lower the chances of a good ROI.
Easy Exit Strategies
Choices in an investment portfolio are always a good thing. Residential investors who construct build-to-rent single or multi-family houses have a variety of exit strategies when it comes time to sell.
Invest in Build-to-Rent Houses
Ready to buy your first home? Insula Capital Group is a leading private investment firm that offers different real estate loans to investors. We offer fast and reliable loans with zero hidden charges. Our services include real estate lending, fix and flip loans, hard money construction loans, etc.
Reach out to us to know more about real estate investment and home construction loans.