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What are Build to Rent Rental Properties?

By: Gregg Cohen, CEO, JWB Real Estate Companies
October 31, 2014
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The glory days of buying a cheap home that has been foreclosed upon have all but dried up in most markets. The boom from 2008 to 2012 has subsided and home prices are now again on the rise. The rental market is still a strong asset for investors and a new breed of property ownership is helping to build capital for housing industry investors. This page and video explores what are build to rent properties for the average investor.

The Build to Rent Concept

When materials to build homes drop in price, it is cheaper to construct a property. Construction of house is only part of the investment needed for a person who plans to build a property in an emerging market. Building homes that hit the market first as a rental instead of waiting for a sale that might never come is a faster method to profit as a real estate investor.

There are downsides to owning pre-existing rental homes that some new investors are not aware of before investing. The age of the home is a big factor in whether or not a renter will sign a long-term lease agreement. Older homes can be prone to faster rates of deterioration and renters can grow tired of continuous issues. The homes built to rent concept helps investors to start off owning a brand new home at a more affordable price.

Cost Savings With New Homes

A house that is freshly built has a lot of money saving advantages for investors. The property insurance is often less expense each year due to condition of the home. More insurance companies are offering lower annual costs for homeowners insurance to owners of new properties versus older homes.

Because many older homes have aged appliances, replacements will likely be necessary for a new investor. These costs are now always figured into the future goals of investors and can decrease passive income. A home that was recently constructed can often demand a higher rent price because of the age and location. Being the first investor on the market to own a home before it is deteriorated could secure a buy and hold future.

The Build to Rent Model is a Cash Earner

Homes purchased through real estate agents will always include a commission on the property. The land value usually increases before the property is placed on the market and this also increases the selling price. Paying too much for an existing home can increase the length of time required for a property investor to earn back the initial investment. The positive cash flow found in build to rent houses has been pioneered by JWB since 2010.

 

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