Demand for “build-for-rent” homes is growing quickly, according to the National Rental Home Council. These professionally managed, single-family homes include expansive yards, high ceilings, top-of-the-line appliances and hardwood floors. Landlords typically build these communities to include luxury amenities such as gyms, pools, community clubhouses, gated entrances and dog parks.
David Howard is the executive director for the National Rental Home Council. He recently responded to questions posed by the Providence Business News to discuss what these homes might mean for Rhode Islanders.
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PBN: Can you briefly explain what “built-for-rent” homes are?
HOWARD: A “build-for-rent” home is one that is constructed for the purpose of renting. Essentially a build-for-rent home is like any other newly constructed home but instead of selling the property to a homebuyer, the builder will either rent the property, or in some cases will sell it to a rental home company that will then rent and manage the property. It’s really no different than a newly constructed apartment building, except rather than containing multiple units for rent, the build-for-rent home contains a single unit.
PBN: Why are they being constructed at higher rates now?
HOWARD: Activity in the build-for-rent space, along with the rest of the single-family rental home market, is being driven by an escalating demand for housing throughout the country. There simply aren’t enough homes to meet the need. Build-for-rent is an exciting new way to increase the supply of housing.
PBN: What populations are driving growth?
HOWARD: We are seeing a lot of demand from millennials and families with young children. Build-for-rent is a housing type that combines the amenities of a single-family home lifestyle with the flexibility and affordability that rental housing provides. Plus, the resident benefits from all the attributes associated with living in a new home – smart home technologies, appliances, etc. Interestingly, seniors and empty-nesters are also drawn to build-for-rent homes because they value the professional property management services and 24/7 resident and customer care.
PBN: What do the rent rates typically look like? Should prospective renters expect them to be less, more, or average with the surrounding region?
HOWARD: Pricing really depends on prevailing market rental rates and the location of the homes or communities within the metropolitan area. Nationally, we are seeing rates for build-for-rent homes consistent with those in the broader single-family rental-home market. Our data also shows on average the monthly rent payment for a single-family rental home is less than the monthly mortgage payment to own a comparable home.
PBN: Here in Rhode Island, the unemployment rate is high, and many are finding it difficult to make their monthly payments. Why do families opt to rent during recessions?
HOWARD: Rental homes provide both flexibility and affordability for residents who may not be in a position – for whatever reason – to purchase a home. Often, individuals whose circumstances might not allow for the purchase of a home find that renting is a good option until their longer-term housing plans become more clear.
Alexa Gagosz is a PBN staff writer. Contact her at Gagosz@PBN.com. You may also follow her on Twitter at @AlexaGagosz.
