By: Joshua Williams

Build-to-rent housing is a relatively new term in the real estate industry that refers to housing developments built specifically for rental purposes. The concept has become increasingly popular over the years, and many real estate developers are investing heavily in this area. While the concept may seem new, there are many similarities between build-to-rent housing and traditional multifamily housing.

One of the primary similarities between build-to-rent and multifamily housing is that they are both designed for rental purposes. In a multifamily development, the units are typically owned by individual investors, and the property is managed by a third-party management company. In a build-to-rent development, the entire property is owned by a single entity, which typically manages the property in-house.

Although build-to-rent and multifamily housing shares a variety of unit types available, build-to-rent developments are more tailored to special requirements and modern preferences. Both types of developments typically offer a range of unit sizes and layouts to cater to different tenants' needs. Our build-to-rent unit focus typically is two bedrooms plus for dual earning household and possibly households with a child or children who are waiting to take the next step to homeownership. We believe build-to-rent speaks to a wider and more diverse range of housing options to meet different budgets and lifestyles.

Build-to-rent and multifamily housing also share similarities in terms of community amenities. Both types of developments typically offer a range of amenities designed to enhance the tenant's living experience. Examples of these amenities include swimming pools, fitness centers, community lounges, and outdoor spaces such as courtyards and barbecue areas. By providing these types of amenities, both build-to-rent and multifamily housing developers aim to create a sense of community and foster social interaction among tenants.

In terms of financing, build-to-rent and multifamily housing also have many similarities. Both types of developments can be financed through a range of options, including traditional mortgages, commercial real estate loans, and private equity financing. However, build-to-rent housing developers may also utilize alternative financing options, such as crowdfunding and investment from institutional investors.

The last similarity between build-to-rent and multifamily housing is the strong potential for long-term investment returns. Both types of developments can provide steady rental income, and their value can appreciate over time. Additionally, both types of developments can benefit from economies of scale, such as lower operating costs and higher rental income per unit.

While there are many similarities between build-to-rent and multifamily housing, there are also some key differences. One of the primary differences is the level of control that the developer has over the property. In a build-to-rent development, the developer typically has complete control over the property's management and operations, which can provide greater flexibility and the ability to make quicker decisions. In a multifamily development, the property is typically managed by a third-party management company, which can lead to a more hands-off approach for the developer.

Another difference is the level of customization available in build-to-rent developments. Because the developer has complete control over the property, they can customize the design and layout of the units to cater to specific tenant needs. This level of customization is typically not available in traditional multifamily developments.

Importantly, for investors, both types of developments offer the potential for long-term investment returns and can benefit from economies of scale. While there are some key differences between the two, investing in a build-to-rent development can be a smart choice for those looking to diversify in commercial real estate.