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Build to Rent – Matching Community Types with Renter Segments

Build to Rent Loans For Real Estate Investors by CoreVest Finance
Photo Credit: Kinloch Partners’ new Build to Rent subdivision in Spring Hill, Tennessee. Funded by CoreVest

 

By Boris Zhuravel, Managing Director

Over the last 12 months the Build-to-Rent asset class has proliferated within the new rental housing landscape as developers and operators have sought to establish or increase single family rental exposure in their portfolios. This is not just a COVID-19-related strategy shift to accommodate renters’ demand for more livable space, amenities and “socially distanced” living. Many projects breaking ground today have been in planning stages for the last 12-18 months.

As an active Build-to-Rent construction lender, I see 10-15 projects and speak with dozens of developers monthly, leading to the realization that there is tremendous diversity among the various Build to Rent projects being brought to market. What I can tell you is that the type of project you want to build and the tenant segment you want to attract is equally important as the market you choose and the property’s location within that market.

The most existing aspect of the Build to Rent is the ability to correspond the project type to precisely meet the needs of a particular tenant segment. Let’s briefly discuss some of the Build to Rent project types and what renter segments they attract.

Horizontal Multifamily

Horizontal Multifamily typically includes a mix of one and two-bedroom, detached or semi-attached simplex units, and it is the densest project type within the Build to Rent asset class averaging between 6 and 12 units per acre. All units will provide private outdoor space, but not all units will offer a car port or an attached garage. A horizontal multifamily project typically targets the same tenant base as a traditional garden-style or mid-rise multifamily project.

Townhome Community

Townhome Community offers a unit mix of attached or semi-attached two-bedroom, three-bedroom and four-bedroom units with a density of four to eight units per acre. All units will offer private parking and outdoor space. The townhome community typically targets couples (with and without pets), families, empty nesters and retirees.

Detached SFR Community

Detached SFR Community offers the “greenest” space of all the Build to Rent communities along with larger units that primarily offer three or four bedrooms. A Detached SFR targets the same renter pool as a Townhome Community, while providing an experience that mimics owning a home. I have also seen several ranch-style SFR communities built for active adults, which is a growing renter segment in and of itself.

Mixed-Unit Community

Finally, a Mixed-Unit Community combines the best of all Build to Rent worlds by offering a variety of unit types that fit most renter segments. I’ve only seen a couple of these projects because seamlessly blending simplexes, townhomes and detached SFRs is a tremendous architectural and design challenge.

Whatever project you choose to build, CoreVest is here for you every step of the way. Allow us to become part of your team, as your preferred lending partner. For more information about how CoreVest can help you grow your rental business, please call Boris Zhuravel at 347.431.0713 or email boris.zhuravel@cvest.com.

 

 

 

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