Pros, Cons, + 5 Tips for Designing a Custom Built-to-Rent Home
Since the housing market crash of 2007, the number of renters has been on the rise. Due to financial struggles and student loan debt, many millennials feel they are unable or not ready to take on the financial stress of owning a home.
In light of the rise in renters, a new real estate market trend in homes has emerged, and many investors and homebuilders are choosing to turn toward developing built-to-rent homes.
“Build-to-rent,” “BFR” and “B2R” are interchangeable terms used to describe detached units built specifically for long-term rental.
Read on for the pros and cons and five of our best tips for developing or investing in a built-to-rent home.
WHAT DO BUILT-TO-RENT HOMES LOOK LIKE?
A built-to-rent home can be a traditional suburban-style family home or it can be:
Horizontal Apartments- A tight group of professionally managed, freestanding, single-family residences
Duplexes- Two living units that are attached by a wall or separated by a floor in between
Row or Terrace Houses- Homes built side by side, typically sharing a wall
Small Lot Homes- individual homes built close together and as small as 600 square feet, including the yard
WHAT PERCENTAGE OF HOMES ARE BUILT TO RENT?
Built-to-Rent homes make up only 5% of property as of 2021 but they are currently trending and on the rise. Built-to-rent homes saw an increase of 20,000 more homes from 2019 to 2020 as compared to the previous 40-year average.
THE PROS OF BUILDING A B2R PROPERTY
Less Tenant Turnover
Apartments appeal to people looking for a more temporary living situation. Those choosing to rent a built-to-rent property are typically longer-term renters. That means that you won’t have to spend as much time trying to find renters to fill your property.
More in Rent
Rent payments have been increasing by 4.5% annually. Larger multi-family units have only increased by 3%.
THE CONS OF BUILDING A B2R PROPERTY
Competition with Bigger Businesses
It may be difficult to compete with big business rental companies in the area with their marketing and repair budgets. They also have lawyers to protect their investments and contracts and they also have contracts with appliance repair and installation companies that make their margins higher.
Getting a Good Return on Investmentment May Be Difficult
The less money you spend on a property, the easier it is to get your return on investment. Flipping a house may be a quicker way to get your return on investment. But even with a slower return on investment, building a solid B2R property is still a good choice and will eventually pay off if you take your time selecting an ideal tenant.
5 TIPS FOR DESIGNING A CUSTOM B2R HOME
Make it comfortable and appealing for the tenant
Add tasteful curb appeal that will attract top-tier tenants
Make the home efficient and aesthetically pleasing, with great natural lighting if possible
Spring for a few luxury items such as taps and lighting
Make the home feel spacious
READY TO BUILD YOUR CUSTOM BUILT-TO-RENT HOME?
The professionals at Creative Home Designers are ready to help you bring your built-to-rent home to life. We can customize a floor plan and home design to meet your unique needs. We help you by maximizing the efficiency, flow, and design of your customized home within your lot size—and we’ll make it look great.
Call us today for a consultation. We’ll begin by discussing your vision for your custom home and then we’ll get to work creating a design and plan just for you. We can even offer a 3D rendering of your home design to help you envision your future home. Then, due to our extensive Oklahoma network, we can connect you with trusted builders and providers who will see you through to the finish line. Click here to browse more of our creative home designs.