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Build-to-rent (BTR) homes have revolutionized the definition of rental properties and taken the world of real estate investment to the next level.
According to reports, the United States build-to-rent industry is expected to grow at an exponential rate in the upcoming years. Primarily because the recession and increasing housing costs have made it nearly impossible for consumers to purchase a single-family home. Thus, residing in a build-to-rent home is their greatest alternative. To learn more about the investment opportunities in build-to-rent, keep reading the article.
1. Potential for Scalable Returns
Build-to-rent houses have always been popular because they’re built and managed with the intention of being rented out for a long time. The properties are built and managed with the intention of being rented out for a long period of time. The average length of a build-to-rent tenancy agreement is 3 to 5 years.
The length of the tenancy agreement depends on the tenant’s needs, the communal facilities and amenities, and other factors. You’ll be surprised to learn that rental prices have only risen since 2017. In fact, a 2021 report found that rental rates are 10.3 percent higher than last year. These statistics assure investors that build-to-rent properties will generate high income and they will enjoy high returns on their investment.
2. Protection Against Inflation
Despite the never-ending inflation post-pandemic, build-to-rent has provided investors with a hedge against recession and profitable returns, making it one of the most desired sectors in real estate. When the cost of living rises, people shift their interest towards rental homes, resulting in higher rents for investors. According to a report by Hunter Housing Economics, real estate investors will put up to $40 billion in the build-to-rent development sector in the coming year.
Build-to-rent is an excellent option for investors who wish to have a diversified risk-adjusted, and well-balanced portfolio. This is because build-to-rent homes offer investors the opportunity to explore the real estate market without the need to own a property or live in it outright.
4. Tax Breaks
Tax breaks are one of the biggest benefits of investing in build-to-rent properties. Investors can benefit from tax deductions on interest and depreciation because the build-to-rent industry is viewed more like a business. Even though the sum may be tiny, the investors stand to save a lot of money over time.
Wrapping It Up!
Build-to-rent homes are specifically constructed for the sole purpose of being rented out. They are an ideal real estate investment for people who want to diversify their portfolios, earn passive income, and gain tax benefits. Considering that the location, amenities, and community play an integral role in setting the rental value of the build-to-rent home, make sure to do thorough market research before investing in a BTR property.
The four ways of investing in the build-to-rent sector include residential real estate investment trusts (REITs), crowdfunding platforms, publicly traded institutional builders/owners, and BTR loans.