Townhomes have become the go-to option for many first-time buyers, but some builders are upping the ante with new detached rental products that redefine the path to homeownership.
As millennials experience major life changes, like marriage, children and advancing careers, they are embracing another possibly high-cost, and at least semi-permanent change: homeownership. However, renting by choice – instead of owning outright – is becoming increasingly popular among this demographic.
The opportunity to own a new home is diminishing – with new home sales down 7.7% from January 2019 to January 2017 – and attainability remains a major obstacle, especially for young buyers challenged by rising costs, heavy debt burdens and limited ability to save for a down payment. Newly constructed, built for-rent single-family homes present these buyers with a terrific opportunity to live the American dream – without the additional responsibilities and stress of homeownership. In 2019, home builders who want to stay ahead need to consider the strategic development of built for rent (BFR) single-family products.
According to BSB Design’s Senior Principal Rick Henry, single-family rental homes offer plenty of advantages. Today’s renters love having their own yards and enhanced privacy, two things which single-family for-rent properties have at the ready. But as rentals, these single-family products use high-quality interior finishes and materials to mitigate potential damage, and those finishes just feel more luxurious in a detached product. For young families looking to grow, single-family rentals often offer more space. In a recent survey, 65 percent of single-family rentals compared to 11 percent of apartments offer three or more bedrooms. Renters can enjoy all the positives of single-family housing – including the added space – without the 30-year mortgages, down payments or maintenance.
Henry says, “The statistics also illustrate myriad benefits for builders, developers and property managers. First, diversifying product offerings is always a good thing, especially with waning single-family sales numbers of late. Developers appreciate the market penetration these rental homes achieve, allowing them to target younger newlyweds, families and even retirees. And finally, with a lower turnover rate for tenants compared to traditional multifamily rentals, property managers can earn premium rents.”
Transitioning from a multifamily property to a single-family rental home is a “move-up” solution for those who desire to have the flexibility to travel, live a low maintenance lifestyle or avoid financial burdens. So as you begin to implement your strategy for 2019 and beyond, consider including built for-rent single-family homes.
Post courtesy of BSB Design, a nationally-recognized design firm offering an array of design and development services, including land planning, community design, resort planning and design, landscape architecture, market research, estimating and color services.