Build to rent refers to purpose-built, professionally managed single-family and townhome communities built specifically for the rental market rather than for sale.
Why It’s Happening
Younger generations are forming households later and are more mobile, often preferring not to own. Empty nesters are drawn to the model too, for the ease of living and ability to relocate.
Pandemic-driven relocation from cities to suburban areas fueled demand for more housing types — much of it transitory, meaning fewer people looking to buy.
Lifestyle shifts toward remote work have increased demand for privacy, outdoor space, and a sense of neighborhood. Pet ownership is a big driver too, growing 14% in 2021 alone.
How It’s Happening
Builders are redirecting resources to build-to-rent. With labor and supply shortages, it’s more efficient to build ten identical homes than to customize for individual buyers.
Record rents make the model financially attractive — builders can now sell a completed home to an investor for roughly the same price as to a homeowner.
Equity capital is pouring into the space, topping $10 billion in 2021 and still climbing.
Lenders have grown more comfortable with the product type, with Freddie Mac, Fannie Mae, life insurance companies, traditional banks, and private debt funds all financing build-to-rent properties on attractive terms.
Where It’s Happening
While the Sun Belt and Northwest are seeing the most growth, build-to-rent communities are popping up everywhere — including right here in Pennsylvania and Maryland, built by both local and national developers.
When to Expect Growth
Industry forecasts expect the sector to double by 2024. Acquisition, land development, and construction all take time, so while the trend is hot, it will take years to fully play out.
Looking to get into the build-to-rent space? Reach out — we can help you add this asset class to your portfolio.
