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Build-to-Rent Properties: A Quick Investor Lesson

by Becky Scherzer 01/05/2020

Image by Виктория Бородинова from Pixabay

Build-to-rent is a major term right now for investors. The industry has seen a serious leap in interest in just the past year, making nearly everyone in the real estate space sit up and take notice. We'll look at the special nature of these properties and which attributes make a property more valuable than another. 

The Hot Spots 

Build-to-rent generally refers to a single-family property built to be used by renters rather than owners. It's popular because it's difficult to profit off of a new build, especially when you take into account the price of the land, materials, and permit costs. The areas that are exploding with these properties tend to be affordable cities with plenty of available infrastructure.

Atlanta, Houston, Charlotte: these hot spots are attracting young renters who may not have a sizable down payment saved for a new house, but they're still willing to pay for the right amenities. It's making it relatively easy for investors to recoup their money (and then some). 

The History of Build-to-Rent 

This trend got its start after the recession churned out countless foreclosures and short sales, but has since morphed into its own asset class. Once home prices started to creep back up, investors saw that there was plenty of money to be made in renting even after the economy returned. Today, the build-to-rent industry is largely driven by new homes. Developers may build several dozen homes in a single area, making it easier for property managers to respond to renter requests and perform regular maintenance.  

What's Behind the Success

The most successful build-to-rent properties are those in highly popular areas that would otherwise be too expensive to the everyday renter. Less than half of all millennials have any kind of substantial savings to put toward homeownership, and even the Baby Boomers are starting to turn toward renting (whether they need to or not). In addition, home appreciation has slowed over the past few years and new tax rules don't exactly make it an open-and-shut case that owning is the best choice available. 

Investors who have the opportunity to get involved in build-to-rent will likely be happy they did. The key is to look for properties that are sensible in nature. Avoid those in areas that make it difficult to build (either through expensive permits or restrictive building codes). Opt for properties in nice areas made with affordable, durable materials. This will cut back on maintenance and increase your profits in the long run. 

About the Author
Author

Becky Scherzer

Welcome! Looking to buy or sell real estate in the St. Louis area, don’t look any further than Becky Scherzer and Scherzer Real Estate for all of your needs! My family and I have lived in the St. Louis area for more than 50 years, so I know the St. Louis area! In addition, I am a full-time agent with the #1 real estate office in the St. Louis area and the #1 real estate company in the country! My mission is to create a much different brand of real estate services, one that exceeds expectations, delivers results and exceptional service at a level never seen before in the industry. When you choose me to represent you in selling your home or buying a new home, I will work with you to an extent unmatched by any other Realtor. I invest a great deal of time, energy and money to ensure not only the highest sales price possible for your home or finding your new dream home, but that the process, your experience, is as smooth and stress-free as possible. I am fortunate to have the support of a group of highly trained professionals to assist me in ensuring a seamless, efficient and straightforward path to your success. I will continuously evolve to meet the challenges of our very dynamic, ever-changing market conditions. What will never change is my commitment to provide my clients the level of expertise and innovation they deserve. Getting great advice on selling your home or buying a new home is simple, JUST ASK me!