Over the last few years, there have been many changes in the real estate market. One unique trend that has gained popularity is the investment in build-to-rent communities. Not only are private investors shifting their capital in favor of them, but major homebuilders too. This is due to the change in market demand.
More renters are choosing single-family homes versus traditional apartments for many reasons, like more space for remote working and larger families and community amenities. With over 100 years of combined experience, Frank Betz Associates has the expertise needed to design house plans that will meet the needs of builders, investors, developers, and tenants.
Read on to learn a few advantages of investing in build-to-rent homes and our top house plan designs perfect for this type of investment.
Are Build-to-Rent Homes a Good Investment?
Build-to-rent properties are a type of investment where homes (or, more often, whole communities of homes) are built specifically for rent. These can be single-family dwellings for renters seeking the benefits of a new construction home without the mortgage requirements. Along with advantages for the tenants, there are many advantages for investors.
More Long-Term Tenants
Build-to-rent properties offer the lowest vacancy levels because of the many ways they appeal to potential tenants. This is especially true for Millennials and Gen Z age groups, who may not be able to obtain homeownership yet. Newly constructed single-family homes built with higher quality and excellent property upkeep are an attractive alternative to traditional apartments. Rather than renting for about one to two years, we’re now seeing a 70% resident renewal rate for build-to-rent properties.
Strong and Increasing Demand
After the pandemic, people began leaving big cities for properties in the secondary market, such as single-family rentals. Tenants from multi-unit apartment complexes are flocking to this option now more than ever, and industry experts expect the trend to continue.
Higher Risk-Adjusted Return
Along with the stable investment of residential real estate, adding build-to-rent properties will help streamline efficiency and ensure lower vacancy. They can use strategies to create a balanced portfolio and file everything to avoid potential risks. As a result, portfolios with these strategies will allow investors to capitalize in each market segment and benefit from the portfolio associated with vacancy, liquidity, maintenance, and market valuation.
Better Rent Growth
Control over rent rates is a major benefit of this type of property investment. Since 2017, there’s been a significant increase in rental prices, and most markets expect to see rent growth exceeding inflation while maintaining occupancy. When combined with a robust property management system, investing in build-to-rent communities will bring in high income that could become an inflation-shielding investment.
Choosing the Location
Instead of waiting to find single-family homes in foreclosure, built-to-rent homes are an excellent investment that lets builders, developers, and real estate investors strategically select the homes’ location. Imagine the possibility of choosing markets with lower property taxes. Also, with the high demand coming specifically from the Millennial and Gen Z age groups, the option of developing in communities near sought-after job opportunities can result in an even better ROI.
Examples of Our Build-for-Rent House Plans
Riverbrooke
Within the 1,835 square feet of this house plan, renters will find a large kitchen island that opens to the spacious vaulted family room. A flex room at the front of the house is ideal for whatever they need, like a dining room, living room, or den. The second-floor hosts all bedrooms, including a jacuzzi tub and his and her walk-in closets in the owner’s suite. Renters will enjoy the convenience of a laundry room in the hall, steps from the two family bedrooms.
Oak Grove
A house plan like this is perfect for future tenants who want upscale features. In the owner’s suite alone, they’ll find dual walk-in closets, a shower and garden tub, and tray ceilings. There are 3 additional bedrooms in this 2,386-square foot plan, one with its own walk-in closet. The first floor provides an open layout with an easy flow, a fireplace in the great room, deck access, and a large kitchen with an island. Near the breakfast nook, a computer room provides a great place for WFH tenants or a homework space for kids.
Clarksville
This house plan is perfectly suited for an infill lot and makes for a cost-effective option. In less than 2,500 square feet, there are 4 bedrooms and 3 bathrooms. The stone and shingle embellishments provide lovely curb appeal to attract many tenants. It also has walk-in closets in the owner’s suite as well as in two of the three remaining bedrooms. A rear deck is a perfect spot for tenants to have more outdoor space than they’ll find in traditional apartment options.
Liberty Park
A country-style home with plenty of space in the common living areas for quality family gatherings. Specifically in the kitchen, tenants can enjoy a home-cooked meal out on the deck, in the dining room, or even on the large snack-bar island just off the family room. There’s a window-side tub in the owner’s suite for a much-needed retreat for tenants. The second-floor laundry room will also provide convenience, generous walk-in closets in the owner’s suite, and two additional bedrooms.
There are many reasons why build-for-rent homes and communities are a good investment. Frank Betz Associates is an excellent resource for house plans that appeal to potential tenants. Call, email, or visit us online for questions and information about our house plans.