What Are Build-For-Rent Homes?

Build-for-rent homes are townhouses or single-family houses built for the express purpose of renting to tenants. They are also known as build-to-rent or BFR homes and are growing in popularity in recent months. Build-for-rent communities increase housing inventory for people who can’t or don’t want to buy for various reasons. In today’s real estate market, BFR is having a moment as the rental market is hot, affordability is a big concern regarding homebuying, and more people prefer the quality and convenience of new builds in light of increasing rental prices.

Why are BFR homes rising in popularity?

In 2023, build-for-rent homes are doing well. With higher interest rates pricing more buyers out of buying homes, rentals are in high demand. Build-to-rent homes provide an inventory of single-family rentals in high demand as owners of resale homes are more reluctant to list their homes on the market. Therefore, it’s highly probable to see more build-to-rent communities in development in the coming months to meet housing market demands.

What do build-for-rent communities look like?

Build-for-rent communities usually consist of townhouses, duplexes, or single-family rentals built simultaneously or in phases. These communities often share amenities like a community center, park, fitness center, or pool to add value.

The homes themselves are designed to be rentals, so they are uniform in design and material selection. These often include more durable materials like luxury vinyl that can last for years. New BFR communities have modern layouts and are easy to market since all units have similar floor plans, appliances, and features.

bar graph showing build to rent units nationwide. 2019 6,667, 2020-7469, 2021 9,928, 2022 14,541, and 2023 44,700 in construction. Source: Yardi Matrix

Source: Yardi Matrix

Graph by: Andy Satkowiak, Marketplace Homes CRO

The build-for-rent model has gained popularity in recent years due to several factors. First, it provides a solution to the increasing demand for rental housing due to more people being priced out of buying a home. There are also, as always, residents who prefer the flexibility of renting rather than buying a home.

Second, real estate developers and investors can generate a stable and long-term income stream through rental properties. Having an entire lot of rental homes in one area instead of various units of different styles and ages in other locations also expedites maintenance requests. It makes it easier for tenants to get excellent service.

What are the benefits of a BFR home?

Build-for-rent homes have several benefits. First, these neighborhoods all belong to a single owner, so all of them are easier to maintain and get responsive service. New, well-maintained homes also have fewer issues and “wild cards” compared to older homes that could have had multiple owners. Residents also enjoy a lifestyle free from the commitment and responsibilities of homeownership, as well as a place to live when one is unsure if they want to plant roots in the area. The shared amenities and a sense of community can also increase the renters’ quality of life.

For investors, owning a BFR community can provide long-term real estate investment income in the most convenient setting. Instead of driving around town to answer service calls or follow up on a property for move-ins or move-outs, all the homes are in one place. Overall, this setup optimizes tenant turnover.

It could also be an opportunity for multiple investors to crowdsource to make investing in a large development accessible for individuals of different income capacities. The usual benefits like passive income and the ongoing trend of appreciation over time still apply.

Build-for-Rent Homes

Overall, BFR rental communities are an alternative housing option that addresses the growing demand for single-family home rental properties. Offering a range of benefits to both developers and tenants, they are only becoming more popular. Marketplace Homes is excited about this trend that provides perks to simplify the rental experience for all parties.

If you are a real estate pro interested in BFR or a renter who wants to become a homeowner, Marketplace Homes can help. We are an integrated brokerage that assists with various real estate services, including property management, long-term rental management, buying and selling homes, portfolio management, and much more.

Summary: Build-for-rent homes are new construction single-family homes or townhouses that are made exclusively for renters. These homes are owned by investors and are optimized to be rentals to future tenants. This article discusses the typical features of a BFR home and its benefits.