Built for Rent Single Family Homes
Townhomes have become the go-to option for many first-time buyers, but some builders are upping the ante with new detached rental products that redefine the path to homeownership.
As Millennials experience major life changes, like marriage, children and advancing careers, they are embracing another change that combats the high cost and permanent decision of buying a home. Renting by choice is becoming increasingly popular among this demographic.
The opportunity to own a new home is diminishing – with new home sales down 7.7% from this time in 2017 – and attainability remains a major obstacle, especially for young buyers challenged by rising costs, heavy debt burdens, and limited ability to save for a down payment. Newly constructed, built for rent single family homes present these buyers with a terrific opportunity to live the American dream – without the additional responsibilities and stress of homeownership. In 2019, home builders need to consider the strategic development of built for rent (BFR) single family products.
According to BSB Design’s Rick Henry, single family rental homes offer plenty of advantages over traditional rental products. Today’s renters love having their own yards and enhanced privacy, two things apartments can never offer. But as rentals, these single family products use high-quality interior finishes and materials to mitigate potential damage, and those finishes just feel more luxurious in a detached product. Not to mention, only 11% of apartments have 3+ bedrooms, while 65% of single family for rent homes have 3+ bedrooms, making it an ideal choice for young families who can’t quite afford a home yet. Renters can have all the positives of single family housing without the 30-year mortgages, down payments or maintenance.
Henry says, “The statistics also illustrate myriad benefits for builders, developers and property managers. First, diversifying product offerings is always a good thing, especially with waning single family sales numbers of late. Developers appreciate the market penetration these rental homes achieve, allowing them to target younger newlyweds, families and even retirees. And finally, with a lower turnover rate for tenants compared to traditional multifamily rentals, property managers can earn premium rents.”
Transitioning from a multifamily property to a single family rental home is a “move-up” solution for those who desire to have the flexibility to travel, live a low maintenance lifestyle or avoid financial burdens. So as you begin to implement your strategy for 2019, consider including built for rent single family homes.
NAHB article: Single Family Built-for-Rent Construction Posts Gain in 2018.
RICK HENRY – SENIOR principal / OFFICE LEADER
Rick Henry has over 20 years of experience in residential architecture throughout Arizona with management experience in all types of single family and multifamily development. He has an extensive background in project management, construction documents, staff management and field coordination.