This Is Why Build-to-Rent Homes Are Suddenly Everywhere

published Mar 5, 2024
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Row of High Density Homes in California
Credit: JazK2 / Shutterstock

The homebuying journey gets more than its fair share of attention these days, particularly as the real estate market continues to be absolutely bonkers in many parts of the country. 

While homeownership remains elusive for many, there are more people than ever who choose — at least for now — to remain “forever renters.” But, there’s also a group of in-betweeners who don’t want to compete for million-dollar home prices but still want to own a more modest home. For them, there’s a real estate trend called build-to-rent that is more than happy to welcome them home.

What Is Build-to-Rent?

The build-to-rent (BTR) trend offers all the conveniences and desirable amenities of owning a home in a developed community. In short, real estate developers are building single-family homes and townhouses, and then renting them instead of selling them. And residents are eager to sign leases instead of getting approved for mortgages.

“Renting offers first and foremost flexibility — no hefty mortgage, maintenance hassles, or commitment to one place,” says Chelsea Werner, Global Real Estate Advisor at ONE Sotheby’s. “With BTR, you get brand-spanking-new homes and often stunning amenities.”

Why Is Build-to-Rent So Popular?

Crowdstreet, an online real estate investing platform, is closely following the BTR trend. They wager that because interest rates and homeowner costs are high, people are being forced to rent longer. This is leading more and more investors to the BTR market. David Seymour of Freedom Venture Investments reported that institutional investors poured $49 billion into BTR in 2021 alone — a huge jump from the $9 billion earmarked for it in 2020. 

The biggest demographic trophy goes to the millennials, who crave the convenience and flexibility that renting offers. Many also remember the real estate bubble bursting and its effect on their parents back in the day, so perhaps that’s why they’re not as keen to be strapped with mortgages. And as we’re seeing, renting doesn’t always deserve to play second fiddle to homeownership.

Renting a BTR home definitely offers the flexibility they want, says Fran Lisner, an agent with Daniel Gale Sotheby’s International. “You can move around and explore different locations without being tied down to one property,” she says. “It’s a great option for those who value mobility and convenience in their lifestyle.”

Werner agrees. “[BTR is] your space without the ownership nightmares and headaches,” she says. “Renting is really a chance to live without being tied down. Consider the freedom and convenience.”

Many people have continued to work from home post-pandemic, which is a big driver for more space at home. BTR offers the chance to have a bigger space without the down payment and without any talk of it being a “forever home.” In fact, more and more BTR residences are incorporating flexible spaces so WFH warriors can work hard and play hard at home.

Is Build-to-Rent Right for You?

Like apartment rentals, BTR prices will vary depending on the size of the home and its location. On average, 900- to 1800-foot single-family homes or townhomes with a monthly rental can range between $1,600 and $2,600. 

These are certainly not rock-bottom rental prices — in fact, they might even resemble what you’d be paying for an actual mortgage. But for those who are tired of scraping by to save up for a down payment, it might be a good solution. 

“When considering BTR homes, renters should look at the quality of the property and amenities offered,” says Lisner. “These homes often come with top-notch finishes, modern appliances, and access to exclusive facilities like pools and gyms.” Even better? There’s often a property management service that takes care of it all, so renting is truly a hassle-free experience.

Of course, owning a home is an investment while renting is not. But the growing trend of BTR homes is a chance to enjoy all the aspects of living in a single-family home without the 30-year mortgage commitment.

“While owning a home has its perks, renting a BTR home can be a luxurious and stress-free experience with all the amenities and services you could ask for,” says Lisner. “It’s definitely worth considering if you’re looking for a high-end living experience without the commitment of owning a property.”