More and more builders are building single-family residences specifically for the purpose of renting them out—not selling them. Last year alone, about 43,000 homes were built just to rent out, which is probably the largest number in the last 40 years.
There are some good reasons why builders are doing this. If you have been renter, you’ve probably noticed over the past several years that rents continue to increase. While home prices increased by about 2.7% nationwide year over year, rents in the rental market are growing at a rate of 3.2% nationwide.
In other words: Rentals are currently offering some of the best returns on your investment in real estate at the moment. As we’ve seen in our inventory recently, the demand for single-family homes is absolutely insane. While renters may prefer to raise a family or just live in single-family homes as opposed to an apartment complex or community building, they’re struggling to make a home purchase themselves, meaning they’re willing to pay a little bit more to live in a rental property.
Renting out a home you’ve built is an investment that could actually pay for itself in just 10 years. The math for a build-to-rent home is really simple: For investors who hold these properties for even just seven years, the residual cash flow could be worth more than the sale of the home at one time.
So is there a way that you can benefit from this as well?
One smart option might be to invest in a single-family home for yourself and then turn around to rent it out. Here are a few reasons this option makes sense:
- Mortgage rates are still near an all-time low, which makes this a financially savvy idea. Low rates mean that it’s a lot more affordable to buy a home right now than it would have been just six months ago.
- Several affordable and attractive single-family homes have come on the market in the Metro Phoenix area, so there are options for you.
- There are many builders construction properties in the area, so we can purchase those as they’re being built, and then put renters in them as they’re attained.
If you have any additional questions about the build-to-rent movement or are interested in participating yourself, don’t hesitate to reach out to me. We can talk more to find out if this is a good investment strategy for you. As always, I’m here to be your real estate resource. Hope to hear from you soon!