Most people associate the suburbs with starter families buying their first home or older couples whose kids are all grown up and have moved out. In the past, these assumptions would have been undoubtedly true. However, a new trend in real estate is slowly but surely emerging. These are entire subdivisions designed and built specifically for renters. There are no private homeowners in these suburbs.
One example of a built-to-rent development is the Christopher Todd Communities on Happy Valley, located 30 miles outside Phoenix, Arizona. Developer Todd Wood started his real-estate company five years ago and now has more than 2,000 rental homes in the Phoenix area. We can expect more subdivisions like this, made especially for renters, to be built in the coming years.
These types of subdivisions are managed like typical apartment buildings with staff available for maintenance and repairs. For people who want to experience suburban living but without the burden of a 30-year mortgage, this is the perfect compromise. You can have all the advantages of living in the suburbs – more space, friendly neighborhoods – without the headache that might come with purchasing your own home or maintaining a house. Instead of a homeowners association, housing issues (such as landscaping and repairs) are handled by real estate companies.
Rising housing prices are also making renting become a more attractive option for people. For a fraction of the price of a house, you get to experience suburban living. For urban dwellers who want to move to the suburbs, renting is an easier and quicker way to make it happen than buying property. It also gives renters the freedom to leave after the lease period or continue to rent for years. Currently, built-to-rent homes account for about 6% of total new homes built in the U.S. annually. However, his figure is projected to double by 2024.
Despite its rising popularity, the built-to-rent subdivision movement has encountered some barriers. First, there is a shortage of land that is suitable for these types of housing developments. Second, there is opposition from local homeowners and local government officials. Often, these groups tend to see rental properties as bad for residential property values in the area. Even with these obstacles, the built-to-rent model will continue to keep growing.
The rise of these subdivisions doesn’t mean that all tenants never want to own their own homes. For some, they prefer the temporary freedom and flexibility of renting while getting ready to invest in their own house. In these cases, temporary can mean a few years until they decide where to settle down. For people who want to rent forever or people who see renting as a step before buying their property, the built-to-rent model is beneficial. It is a win-win situation for real estate companies and people who want more rental options. Don’t be surprised if a built-to-rent subdivision is built very soon near you. For more about rental property management services, visit Illume Property Partners