BTR development and investment is on the rise, and it’s not hard to see why. These communities have a lot to offer to renters and real estate investors alike. If you’re not familiar with BTR (build to rent), this is the perfect guide for you. In this article, we’ll explain what build to rent development is, how it works, and why it’s the ideal investment for many firms.
If you’re ready to get started with your BTR real estate investment, get in touch with our experts today to learn more about our developments.
What is a BTR Development?
BTR stands for build to rent. You might also know BTR development by its other names, such as B2R, or BFR (for build for rent). This is a type of development that builds single family homes specifically for rental rather than for sale.
This is a little bit different from your average single family rental (SFR). These are full communities with all the homes designed for long-term tenants. This allows for easier management for investors. You get a whole community rather than purchasing individual homes for rental across a market, which are often inconvenient distances away for effective property management.
Upscale Homes in Communities Specifically Tailored to Renters
There are a few things that set BTR development apart from traditional multifamily. One is that these are single family homes on large lots to provide plenty of yard space and privacy for tenants. Additionally, these homes are generally luxurious to appeal to higher income renters.
Generally speaking, BTR communities are similar to operate compared to a traditional multifamily property, but the comparisons pretty much end there. These are upscale homes that are designed specifically for a certain type of high income earning renter. BTR communities are built for renters who can afford to pay a premium for a single family residence in a suburban area, but don’t necessarily want to purchase a home outright. They feature high quality, modern houses and amenities customized to the target market to drive maximum profit.
Why the Huge Demand for BTR Development Properties?
The demand for build to rent has been skyrocketing in recent years. There are many potential reasons for this, including the 2008 recession and the COVID-19 pandemic. In the last few years, the number of BTR development communities has increased significantly. Here are some reasons why:
People are Choosing to Rent Instead of Buy
The American Dream has traditionally been to own a home. That is still certainly the goal for many people, but a lot of Americans want the perks of owning a home without some of the hassles, like being tied to a mortgage and managing all the maintenance themselves. Now, many people are looking for a way to have both: the lifestyle of living in a single family home without going through the traditional process of reaching that point. In short, many people continue to rent out of choice because of the convenience. As such, there’s more demand for luxurious rental homes instead of simply apartments and other traditional forms of multifamily. BTR development offers this solution for renters and landlords alike.
Renters are Older and Have Higher Incomes than Historically
Studies also show that today’s renters are older, with many being over 35 years old. With this also comes higher income due to longer time in the workforce. As such, a lot of renters prefer BTR developments because they lead lifestyles that lend themselves more to suburban living in single family residences. They are often married with children and also have the income to be able to afford higher rent for luxury build to rent communities.
Millennials Can Afford Single Family Rentals, but Don’t Feel Ready for Home Ownership
In a similar vein, a lot of the renters looking for single family rental homes are millennials who feel they’re not ready to own a home. This may be due to a number of factors, including student loans and other debt. However, they do make up a significant amount of the workforce and do have the income to be able to afford higher rental prices and many are willing to pay the premium to live in a single family home, even if they don’t feel they can afford the down payment on a house.
How does a BTR Development Project Work?
BTR development is a pretty sophisticated process. Your build to rent developers take care of each phase of the development to provide you with a ready to rent community of new, luxury homes. Here are some of the different elements of a good, strategic BTR development.
Build to Rent Developers Source the Perfect Location
One of the most important aspects of a good BTR development is the right location. Renters looking for single family homes generally want to live in very specific areas. Often, these are suburban areas, as more and more people work from home and don’t need to commute to the office. Living in a good school district is also often important to these families. However, often it’s also important for people to live relatively close to the city with easy access to major roadways. Your build to rent developers find ideal locations to build these communities to really appeal to the target market.
Designing and Building Gorgeous Luxury Homes for Low-Density Housing
The next step is to develop the land and build luxury homes on the lots. Generally speaking, if a renter is looking at BTR developments, they want upscale living with a yard and a home that offers all the modern conveniences and designs. These attract the right type of tenant to the area – ones who are willing to pay a premium to live in the community.
Commercial Land Development for Diversification
At the same time, our team also takes care of commercial land development as part of the community. Unlike many other build to rent developers, we provide both residential and commercial areas to help diversify your assets and generate income from both residential and commercial renters. Commercial properties in the community are designed to appeal to the local community, which not only increases the master planned community feel, it also is incredibly attractive to businesses looking for space.
Why Investors Love BTR Development
There are many reasons that investors love the build to rent model, including higher income, lower tenant turnover, and simple management practices.
Because build to rent communities feature luxury homes, they generate a significant amount of rental income, often much more than traditional multifamily communities with more units. People are willing to pay more to live the suburban life. Therefore, these communities can be incredibly profitable.
Another advantage of build to rent single family rental communities is that they’re designed for long-term renters. There’s often significantly less tenant turnover. This translates to less hassle for finding and screening new tenants and more stable income from fewer vacancies.
Finally, the management is incredibly simple for BTR investors. In most cases, you simply pay a property management company to manage it like you would with a multifamily community. Because all the homes are located in one geographical area, it’s often much simpler to manage, which often means cost savings for management fees as well as maintaining more control over the state of each rental property.
Find Lucrative BTR Developments from Landfinity
For top quality build to rent communities, our team at Landfinity is here to help. We specialize in build to rent development with residential and commercial property to provide a unique and lucrative opportunity for investors. Our team takes care of the entire development process to provide you with a finished, ready-to-rent community in in-demand markets throughout Texas. Contact us now to learn more about our communities and investment opportunities.