Summary: This blog will give you the 411 on the latest housing market trend – build-to-rent properties! Dive in to see if BTR is your next investing move, and how to get involved!
Have you heard about the hot new housing market trend? 😏
There’s this cool niche within a niche that is emerging – and we want you to know EXACTLY what’s up, and how to get involved.
Obvi we have got allll the juicy goss, the intel, the 411 (whatever the kids are calling it these days).
When it comes to investing in real estate, you always want to examine the emerging generational buying/renting trends – which we’ve already done for you.
And the truth is…millennials (due to soaring student debt, effects of a pandemic, and low incomes) are renting instead of buying. This number is only getting higher, increasing the demand of rentable properties across the US.
Buuut as renters are starting families and wanting adaptable, up-to-date homes of their own, we see that the affordable supply is made up of older buildings.
You know what that means?
This creates a biiiiig opportunity for in the know investors (that’s YOU 😘) to make lots of money.
👉 Enter: build-to-rent properties (BTR).
Today we’re covering everything you need to know to decide if this lucrative niche is right for you – and how to get involved!
Today we’ll cover:
- What is build-to-rent?
- What are the benefits of BTR investing?
- What are the drawbacks of BTR investing?
- 4 ways to get in the BTR game
First…what are build-to-rent properties?
Let’s get specific about what exactly build-to-rent means in the real estate world. Build-to-rent properties are homes or apartment complexes that are built from the ground up specifically for the purpose of renting out.
This is different from renovating or rehabbing an existing building. BTR offers renters an opportunity to enjoy brand new property without having to buy it and build it.
Whyyy is this niche becoming more common as of late? 🤔
While BTR properties have been around since the 1980s, they are rising in popularity now for several different reasons.
For starters, student debt is at a craaazy all-time high, which hugely affects current adults’ ability to afford to buy homes. Pair that with lower incomes, higher home rates, and – ohhh yeah – a worldwide pandemic, and you have the recipe for the high demand for rental properties.
BTR also offers renters an escape from the homeownership debt and baggage they watched their parents struggle with.
The thing is, people do still crave a home of their own, a place to raise a family, and updated yet affordable living spaces.
What’s the solution?
✨ Build-to-rent properties.
Many BTR complexes feel more like gated communities, and offer comfy amenities like pools and playgrounds, which ups the appeal factor.
So, now you know why renters are seeking out BTR homes and complexes. And where there’s demand, there’s opportunity.
BTR properties can offer some cool opportunities for investors that – as with ANY investment – has some pros and cons.
Since we want you to always have the info to make the besssst financial decisions for you, we’ve got you covered with all the deets 😘
Let’s check out the benefits of BTR investing.
The first (and biggest) benefit of build-to-rent investing is the opportunity for big return with minimal risk.
That’s kiiinda the dream investing scenario, right?
Since you would be able to engineer it from the ground up, you can purchase at a low price, and build in interest rates that make your investment worthwhile. PLUS…buying brand-new properties come with tax breaks 🥳🙌
Let’s look at a few other benefits to real estate investors (as if the above reasons weren’t enough 🤣):
- No maintenance issues: Newly built properties just don’t require as much TLC as older buildings. Less maintenance means fewer costs AND less stress (yes please).
- Long-lasting shelf life: A brand spanking new property will last longer and stay livable a long time – certainly longer than properties built 40 years ago.
- Low insurance premiums: Properties are built with weather conditions in mind, which hugely helps with insurance costs.
- Less tenant turnover: You’ll attract better tenants that want to settle in and stay for a while. The quality of life is high and comfortable, with nice neighborhoods and communities.
- Higher rent: Because of the newness and desirability of these homes, you can potentially charge more in rent.
- Tax benefits: This is just worth mentioning twice…is it not? Oh, and benefits can be applied even after the construction is complete.
- Less competition: Since you can get involved in BTR investing early (like way before anything is built) you might face a much less competitive market.
- Building flexibility: It’s great to have choices for where to build. You can find an up-and-coming area without having to pay higher costs for older buildings.
Just a few drawbacks to consider for build-to-rent investing.
We would not be our thorough selves if we didn’t share both sides to BTR investing.
Remember, not every type of investing is for every investor, and we want you to find your perfect path to financial success! 🤩
Here are the downsides:
- Lack of liquidity: Just like in apartment syndication, you won’t have liquidity for about 5 years.
- Longer hold time: Patience is a payoff for BTR. Since the property isn’t built yet, the hold time will be a little longer than an existing building (maybe 5-7 years instead of 3-5).
- Less control: This can honestly be a pro and a con, depending on what you’re after. As a passive investor, you won’t be making the daily decisions throughout the process (that’s up to the partner or syndicator). If you prefer a hands-off approach, this might sound awesome.
- Sensitive to real estate cycles: Like all real estate, BTR buildings are subject to the effects of market cycles. (Butttt apartment buildings do tend to perform better than other types.)
4 ways to invest in build-to-rent properties
If you’re itching to get in on the BTR action as an individual investor, here are some good – Kitti Sister approved – places to start:
- Residential Real Estate Investment Trust (REITs)
REITs allow you to invest in a trust that is used across multiple properties. This is a good way to get started in BTR investing, but always do your research first. REITs can be used in different types of investing, so look for one that specifically deals with BTR properties.
- Publicly traded institutional builders.
This approach means you are investing with a developer, which gives you more ability for due diligence. You would be invested in fewer properties than REITs. If that sounds good, check out Meritage Homes or Lennor.
- Crowdfunding platforms.
An option that gives you lots of control over properties but requires quite a bit more legwork is crowdfunding. Platforms like Crowdstreet allow you to take charge of gathering investors and designing every part of the property. Make sure you have a solid business plan if this is where you’re leaning.
- Apartment syndication (we’re biased on this one 😊).
We have a HUGE opportunity coming your way to invest in ground-up development with us! We’re hosting a live webinar (coming soon) with all the exciting details.
This offer is exclusively for investors in our Kitti Freedom Club…but don’t fret if that’s not you. You can join the club RIGHT NOW which will give you access to our BTR webinar – as well as tons of other investing opportunities.
We love sharing the investing knowledge that can change lives. Build-to-rent investing can be an awesome addition to your investment portfolio, but we’re to support you wherever your journey leads.
It’s all about finding the right investment style for you…and the sky’s the limit! 😘
THE 411 ON THE BUILD-TO-RENT STRATEGY WEBINAR
ON WEDNESDAY, MARCH 16TH AT 5 PM PST
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