Build-to-rent (BTR) housing has emerged as a significant trend in the real estate market, shifting from traditional homeownership models to large-scale rental developments. This article examines the growth of BTR housing, its economic drivers, and its impact on urban housing markets, as more institutional investors back purpose-built rental communities.
Build-to-rent housing—single-family homes constructed specifically for rental purposes—has seen a rapid increase in popularity, marking a major shift in the housing market in recent years.
The article argues that commonly cited stock market return figures (6–16%) are misleading, recommending 4% as a more realistic assumption. This accounts for compounding (CAGR of 8–11%), inflation of 3–4%, and 1–3% in costs/taxes, resulting in a net real return of 2–6%.
Moses Kagan argues that lower rents require increasing housing supply, not government subsidies, and that private investors can fund development if regulations on permitting, tenant screening, evictions, and rent control are reduced to allow reasonable profits.