BTR communities are attractive to a wide variety of people from different housing situations including multifamily renters, renters of existing (usually standalone) single-family homes and homeowners.
To understand demand for single-family built-to-rent (BTR) communities, it's important to see how the communities are presenting themselves to the consumer and which features are most unique and appealing to different types of consumers.
These characteristics provide great insight into the target audiences of BTR developers and provide a picture of how BTR communities try to distinguish themselves from competing housing product. The key attractions fall into nine principal categories.
Nine Key Consumer Attractions of BTR Communities
Five Key Features Attract Multifamily Renters
BTR communities are very similar to multifamily communities. The biggest difference is the design of the housing unit.
More living space. Most BTR homes are larger than multifamily units in both square footage and in number of rooms. Three- and four-bedroom homes are common. More living space is important for families, but can also be important for other households, especially if a member works from home. In our database of 200+ BTR properties, we have home size data for about 100 assets. Their average is 1,237 sq. ft. Multifamily units average roughly 1,000 sq. ft. The two BTR industry giants—NexMetro Communities and Christopher Todd Communities— typically build homes similar in size to multifamily units. Most other BTR developers are building larger homes averaging closer to 2,000 sq. ft.
Private outdoor space. Nearly all BTR homes come with a fenced backyard. While small, the backyards are large enough for kids and pets to run about, to set up a grill and to enjoy the out-of-doors in privacy.
Privacy. There are no neighbors above, below, or immediately next door. There are no shared exterior walls. BTR communities emphasize the single-family feel. Note that many communities which are billed as "single-family living" are comprised of townhouses, triplexes and/or duplexes. Some are a mixture of these alongside true detached homes. It is debatable as to whether the BTR sector should include these variations. Regardless, the emphasis is on the private outdoor space, limited exposure toother renters and more "home-like" feel.
Attached garage. These are not ubiquitous with BTR homes, but very common. They offer residents not only a place for the car, but more storage space and space for pastimes.
Neighborhood feel. BTR communities are billed as "single-family living," meaning they strive to feel like traditional neighborhoods comprised of families in owner-occupied homes.
Single-Family Renters are Drawn to BTR Homes
There are already 15 million single-family renter households in the U.S. Most are currently living in standalone homes, not BTR communities. BTR communities can be very appealing to this group of renters with two BTR characteristics particularly appealing.
Community amenities. Most BTR communities provide common amenities for use by all residents. The set of amenities often includes a pool, fitness center, clubhouse, playground, and other recreational facilities. Most current single-family renters do not live in communities with amenities.
New build. BTR communities are new. Most are less than three years old and a large percentage are brand new given the very rapid rise of development. Existing SFRs tend to be old. For example, the average age of the securitized pools of SFRs owned by the large public and private operators is 29 years. Not only having a newly built home is appealing, the homes are modern. While not lavish, BTR homes typically have modern home layouts, appliances, technology, etc.
The Appeal to Homeowners
BTR communities are also marketed to and can be appealing to existing homeowners. Similarly, they have characteristics which may tip the balance for renters contemplating homeownership.
Maintenance-free. BTR communities operate like multifamily communities. In-unit maintenance is handled efficiently by management. Likely even more appealing is the outdoor maintenance which is usually handled by management (though sometimes at extra cost to the renter). This includes lawn mowing, snow removal, tree pruning, etc.
Mortgage-free. While getting a mortgage for buying a home is not necessarily a "burden" as often suggested, renting is certainly easier and preferable and/or necessary financially for many households. Renting provides convenience and flexibility. Renting a BTR home (vs. buying a home) may be appealing to individuals and families in transition and/or not ready for the commitment of a mortgage. Households in transition may be newcomers to a city or neighborhood, waiting for a house to be built, starting a new job, getting a divorce, etc. The "ease of renting" can be appealing at least for the short term.
BTR communities will not appeal to all renters or homeowners looking for the key characteristics discussed. We have identified four key drawbacks to BTR communities and BTR living.
Location. Most BTR communities are in farther-out suburbs. While this works for many individuals and families, especially those giving priority to living in better school districts, not everyone wants to live at greater distance from the city center.
Density. The density of BTR communities certainly is lower than most multifamily communities, but many BTR communities are still dense. The private outdoor space offered for most homes is very small and the space between units is minimal.
Rent. While on a per sq. ft. basis, BTR rents are lower than multifamily, most BTR homes are not inexpensive. The average rent per sq. sf. for the ±100 properties in our database with rental data is $1.46. The average monthly rent is $1,779.
Rent vs. Own. The "mortgage-free" lifestyle offered by BTR communities may be appealing to many. However, the rent vs. own math in the areas where BTR communities are located often does not work in favor of renting, especially while mortgage rates remain low.
Amenities. The BTR amenity offerings are comparable to garden apartments and better in that they are newer, but they are usually inferior to the community amenities of newer urban and suburban Class A apartments.