According to a CNBC article, the demand for single-family rental homes is surging! With this in mind, it might make sense for you to consider the “build-to-rent” concept as a way of gaining future income.
If you’re new to the topic, you might not be aware of all the main benefits associated with building to rent. In this short guide, we’ll run through some of the key benefits you may stand to gain if you enter the market.
But before we delve into those benefits, we’ll first provide you with a quick explanation of what “build to rent” properties are all about. Let’s get started.
What Is Build-to-Rent?
With average house prices soaring to new levels, many people just can’t afford to buy their own homes. One solution that’s fast becoming a trend for investors is the creation of “build-to-rent properties.”
Understanding build-to-rent as a concept is easy. Build-to-rent properties are simply homes that people build for the sole purpose of renting them out (as single-family rentals). It is often the case now that construction firms build large complexes of build-to-rent properties for others to then buy as an investment and rent out as a landlord.
Now let’s check out some of the key benefits of going down the build-to-rent route:
Build-to-Rent Property Valuations
Unlike standard properties, the market tends to value build-to-rent homes in a different way. The valuation is typically based on a property’s ability for rental income in the long term (valued on merit).
Due to the valuations being different with these sorts of properties, you can expect a more reliable and consistent cash flow. People also believe these types of properties may not depreciate in the same way as standard homes do.
High-Quality Renters
Since most build-to-rent properties are part of a larger managed complex, these types of renters tend to be high-quality candidates. We’re talking about single families in most cases who have a reliable income.
Such build-to-rent projects can gain reliable renters because of the criteria that the management company puts in place. The company can attract these types of renters due to all the amenities they put in place and a desirable location. There may be, for example, top-quality schools in the area where the company decides to situate its housing complex.
They Will Fill Up Faster
When you build homes to sell, the absorption rate for them can be pretty long. The absorption rate refers to the time it takes for someone to buy a home and live in it.
With build-to-rent homes, people do not need so much capital to move in (a deposit and rent). This means the absorption rates for build-to-rent properties tend to be super quick. And the quicker the happens, the quicker you start gaining consistent income on your investment.
if you are interested in learning more, check out this build to rent community. Here you can find build-to-rent tips and a build-to-rent guide with build-to-rent explained from an active industry perspective.
Get in on the Build-to-Rent Property Boom
As house prices soar in the U.S., many investors are choosing to go down the build-to-rent road for consistent and long-term returns. And just think, if you do invest in such a property, you’ll be helping out American families that need this type of accommodation.
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