Build-to-RentMaster-Planned Communities

Build-to-Rent (BTR) Lessons Learned: Strategies for BTR in Master-Planned Communities (MPCs)

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Don Walker

Danielle Nguyen

July 15, 2022

Here are some lessons learned from the experts at our recent third annual Build-to-Rent Virtual Strategy Summit.

BTR increases lot absorption and improves return on capital for master plan community (MPC) developers.

  • BTR allows builders and developers to diversify their portfolio to include another major consumer segment.
    • All panelists agreed that there is room and demand for multiple home designs of BTR communities within most MPCs.
     
  • Lot size is less important to renters than owners. Relative to for-sale product, BTR operators and developers can provide higher-density lots/homes within MPCs, allowing for increased return on capital for land developers.
 
  • Affordability favors renting. Higher mortgage rates are challenging for-sale affordability—resulting in more current rental home tenants staying in place and some potential buyers moving to the sidelines as they can no longer afford to purchase a home, benefiting the BTR industry. See our recent newsletter on demand shifting from owning to renting.
 
  • BTR operators provide additional land buying demand to MPC developers. The more robust overall absorption pace within the MPC will also be beneficial to any retail uses within the community.
 
  • Many BTR tenants eventually buy for-sale homes in the community.

Preferences and demographics are a tailwind for the BTR/SFR industry.

  • Many consumers rent by choice and want the lifestyle provided within MPCs.

    • Millennials are in family formation years, with many purchasing homes, and others are choosing to remain renters and selecting dedicated BTR neighborhoods.

    • BTR communities provide flexibility to move, eliminate the repair and maintenance headaches, and give renters a chance to rent a new home in a community near diverse employment bases and good schools.

    • These BTR neighborhoods often include on-site leasing and maintenance, and their own amenities.  This product is a great alternative for growing renter families that desire privacy relative to more densely built apartments with common hallways and elevators.

     
  • Amenities make communities more valuable—driving higher rents. Building a sense of community can enhance the rent premium.

    • From our analysis of our BTR community database, these are the top community amenities offered:

      • On-site maintenance
       
      • Pool
       
      • Clubhouse
       
      • BBQ area
       
      • Walking trails
       
      • Fitness center
       
      • Dog park
       

Our consulting team has been busy across the country helping clients evaluate new BTR communities every day—in markets you would expect and many you might not. Our research team continues to keep our clients up to date with thoughtful insight on where the market is headed with our housing and economic forecasts on both the for-sale and for-rent
markets.

To learn more about the single-family rental and/or build-to-rent market, contact us and we can walk you through how we can help you make informed strategic decisions or show you our research membership.

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About The Author

Don Walker Headshot
Don Walker
Managing Principal
Don has 30+ years of experience in real estate finance and operations, including running a Top 40 homebuilder, and uses this experience to help clients make informed, strategic investment decisions in real estate. Don is passionate about build-to-rent, product and community planning, builder/developer M&A, and property and company valuations.
danielle Nguyen photo
Danielle Nguyen
Vice President of Research
Danielle manages, implements, and analyzes the housing market with a specific focus on for-sale and for-rent research. She is a research content creator who produces high-quality, insightful, and forward-looking housing research and a trusted resource (connector) for clients and those interested in JBREC’s research.

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