Ever since the beginning of the recession in 2006, the number of total owner-occupied properties has fallen by 1.4%. Over the same period, over half of the gains in rental housing inventory were comprised of single-family rental (SFR) properties. Amidst the economic fallout, several high-profile private equity firms targeted expansive portfolios of SFR homes. Build to Rent (BTR) grew out of this phase: entire developments of SFRs in professionally managed communities featuring in-demand amenities. Below we examine the best build to rent markets in the United States.
BTR adopts the positive characteristics of SFRs and optimizes tenants’ experiences by constructing all residential units within a community overseen by professional property managers. These BTR complexes aren’t merely low-density multifamily developments or geographically concentrated single-family rental portfolios. Instead, they are comparable to traditional, gated residential neighborhoods complete with all the beneficial perks—think swimming pools, tennis courts, dog parks, trails, gardens—that are maintained by management staff without requiring residents to pay costly HOA fees or servicing mortgage debt.
Build to Rent properties are in high demand in virtually all demographics—particularly with the millennial generation.
The U.S. Census Bureau reports that approximately 65% of individuals below the age of 35 currently rent their primary residence. Further data supplied by the Urban Institute corroborate this trend, indicating that the rate of homeownership in Americans aged 25 to 34 is a mere 37%, which comes in 8% under the rate of homeowners from the Generation X and baby boomer generations. So, what is behind this significant discrepancy between these age brackets?
…the desire for additional space and being part of a close-knit community remains strong.
Even with steady employment and a consistent income, a significant percentage of millennials are weighed down by excessive student debt, credit card payments and a lack of savings. Even in multi-income families, it is challenging for millennials to save up for a costly down payment. A report issued by the Unison Home Buyer Survey shows that while 92% of millennials think that owning a home is a worthwhile investment, more than 50% of those polled claim they will delay purchasing a home due to their financial status.
Despite these issues, the desire for additional space and being part of a close-knit community remains strong. BTRs offer the privacy, convenience and quality that are at the top of tenants’ wish-lists and offer them the flexible living situations they want without the long-term financial burden of a mortgage. This emerging preference for single-family rental housing options has driven major developers to break into the market with a hot-selling new product: all-inclusive single-family rental complexes catered to niche tenants that are distinct from the typical apartment resident.
Alpha Tech Lending has closely monitored the emergence of the Build To Rent nationwide trend and found that, as a collective asset class, it has produced excellent results for investors.
According to a recent analysis by the National Association of Home Builders, 47,000 homes were constructed exclusively to be rented last year and the demand for this housing sector is by all accounts projected to increase in the foreseeable future. Our financial experts are ready and willing to work with investors to develop intuitive and effective funding solutions for BTR projects. To help get you started, here is a closer look at three of the leading markets for BTR investments.
No matter what metrics you use to evaluate local real estate markets, the Atlanta metro area is by all accounts extremely active and is garnering tons of investor attention. The Atlanta economy is booming and showing no signs of stagnating any time soon. This has fueled sustainable population growth, comprised of high-earning, young residents looking for flexible living accommodations—the perfect target customer base for BTRs.
Baltimore is an affordable market ideally positioned close to major East Coast metro hubs including Washington DC, Philadelphia, and New York City. Although the average listing price is a mere $285,590—well below the national average of $320,000—home values have appreciated a staggering 29% in less than a decade, a testament to the potential of the Baltimore real estate market in terms of growth and return on value from an investor’s perspective.
The Windy City is the focal point of business and financial activity in the Midwest—playing host to 11 Fortune 500 companies and 22 universities. Chicago also has plenty to offer when it comes to social and cultural attractions, with more than 200 theaters, 7,300 restaurants, 552 parks, and several professional sports teams. A reduced housing inventory means a significant number of the city’s millennial population need affordable housing options to accommodate their active lifestyles—the perfect opportunity for Build-To-Rent investors to pounce on.
Alpha Tech Lending is a leading private money lender who loves lending on build-to-rent properties! Let us help you get access to fast funding. When you partner with Alpha, not only do you get capital, you also get a team of experts who will work with you every step of the way.