Built-to-Rent Homes are expected to reach an all-time high in 2022 fueled by the need for space and privacy
As renters seek out new ways to live with their lifestyles that offer greater room and personal privacy, communities containing single homes that are rented for rent have become the latest trend in housing. The year 2018 saw an average annual construction rate of 67040 homes completed as single-family rental homes. And that trend has increased dramatically with more than 20,000 houses under construction. Cleverly called “horizontal apartments”, communities built solely for rental have become the hottest topic among homeowners. Renting apartments do not appear to be new concepts.
Why is the demand for homes built to-rent growing?
In 2019, builders say the construction-to-rent housing sector is among the fastest-growing sectors on the housing market in the United States. Niche players are attracted to the perfect combination of affordability, choice and the demand for built-to-return homes.
Toll Brothers and Built to Rent
In addition to Toll Brothers, the largest building company has recently announced a $60M investment in BB Living. The group previously worked in Boise, Idaho, Dallas, Denver, Colorado, Houston, Texas, Jacksonville, Florida, Las Vegas, Nevada & Phoenix, Arizona. One of the companies, ECR Hombuilders, has offered IPO funds of $100m for building up 2,000 rental homes in Miami. Avilla Buffalo Run in Commerce City, Colorado exemplifies this Newbuild model in terms of rent. Denver multifamily projects are excellent, also, although there is more land in expensive Colorado to build such projects.
The right features for smart investors
The booming property investment sector in the United States is now geared towards singlefamily housing which is in extremely high demand. The American housing market has been a booming sector for decades. Distressed and remodeled properties only accounted for about 2% of the housing markets during 2018. CNBC takes another close-up view on the building and rental construction industry. ERC is a major building and rental (B2R) property development firm which specializes in the wholesale of small neighborhood homes for affordable single family homes.
What are build to rent homes?
Previously it was a practice of buying houses from a homeowner to rent out and then living in their own homes instead. Build-to-rent properties elevate rental property investments to another level by designing and building new homes from scratch for rental purposes. The idea of renting out property is around for a long time. Similarly, small multifamily properties, such as a duplex or triplex, often contain a leased unit, while larger apartments are usually constructed for rent. This same idea is currently employed to create to-rent homes.
How single family build to rents are evolving
Priority was placed on rental housing development in urban areas in recent years. Young professionals liked the idea of working near the workplace in privileged locations like the major cities. Rental single-family homes typically serve elderly families willing to commute from suburban to city. Forbes has reported lifestyle preferences will change rapidly in 2020, with individuals of all ages moving out of crowded city centers. Increasing numbers of workers prefer the work environment at home for a variety of reasons.
Money is flowing into build to rent housing
SVN/SFhub Advisors is a real estate brokerage that focuses solely on residential property construction. During a 2019 CNBC interview, the Managing Director said there was several billion-dollar investments in building-to-rent housing that the company is seeking to buy. In fact, the company plans to acquire more than 6,000 single-family and rental homes in its first few years. However, it's not just one company. Toll Brothers announced a $60 million merger with Toll Brothers to create a build-to-rent service in 2019.
Built-to-Rent Communities are present in both urban & suburban areas
Because they require lots of land for building, the rental community is prevalent throughout lower population zones, with the majority (61%) located in the city suburbs. It is likely coronaviruses have also had a negative impact on popularity. Some people have moved from cities and rented apartments to find more space to live in rural and suburban areas. Our surveys showed that these kinds of rentals can be attractive to families, besides being the main reason for buying a single-family home over an apartment.
Las Vegas is the best city for built-to-rent houses
Approximately 26% of all single families live in urban communities. Las Vegas has one advantage in this regard: it has the highest number of single-family rentals (2520). In coincidence, Vegas hosts two of the biggest rental communities in the country. The second largest house in Houston's built-in community is 1,620. Houston, an urban center with large land and a large population density can accommodate a large residential community and respond to the high population influx that the state experiences.
Renters are choosing to rent rather than buy
Builders are accommodating renters and building-to-rent construction is increasing rapidly. US rental markets are becoming so crowded that they are attracting people who otherwise would buy. Renters from Florida to New York to California are looking for rental accommodation, and many of them pay large rents for houses and condos. Can the new boom attract more big investment firms like Toll Brothers? It has been identified as being safer and more efficient than the previous builds to-rent system.
Phoenix ranks #1 in the metro for built-to-rent houses
In the Phoenix Metro, 6420 homes were constructed for-rent in primarily built-to-rent areas. The area is also an important metro in new apartment developments making it the highest demand for renters. Columbus Columbus, Ohio is the second-popular Metropolis. 4,780 houses have occupied built-to-return neighborhoods. The region surrounding Cleveland's largest town has been a steady growth zone and has experienced population and employment growth over the past decade.
The Built to Rent Revolution
The built-to-rent housing market sees greater interest in rising rents and increasing demand. Originally designed for rental users, the property offers compelling rental services. Investors have jumped into the rental sector generating demand for owners and managers as well as HOAs. The report also said Rentcafe is planning to build more than 14,000 new homes by 2022. Las Vegas, Houston, Tucson and Phoenix are the most constructed for renting apartments.
