• Login/Sign Up
  • Invest Now

    Want High Returns, Invest Now

    Investment Starts From 5 Lakhs

      Invest In Alternative Real Estate For Assured Fixed-Income

      Make portfolio diversification your financial goal in 2024 and invest in non-volatile alternative real estate products

      Highly Safe


      High Returns

      High Returns

      Invest for short-term

      Short Term

      What Made Build To Rent (BTR) A Sensation In Rental Housing?

      • 5 min read
      • Last Modified Date: April 30, 2024
      Listen to the article
      facebook twitter linkdin whatsapp

      The apartment rental demand is indeed a notable evergreen phenomenon, with affordability being its prime reason. Apparently with the periodic migrations, amenities, maintenance, flexibility, affordability, etc. Most of the people seem rental homes are plausible because of which the real estate agents began to focus more on the “Build to Rent” context. This unfronted a rising break-through within the Rental housing.

      As the name itself suggests, Build to Rent (BTR) involves the building of homes specifically for the rental purpose. A Build to rent scheme will only have one sole owner, one manager, and are designed exclusively with keeping tenants in mind. It allows the property investors to attain long-term investment returns while providing renters with more options and better quality within the locations.

      To be precise, as the investors will be leasing these apartments. And, since many millennials are interested in BTR homes, the investors need not be distressed about their investment profit. Also, there are a lot of multiple alternatives for the renters as of apartments, amenities, etc. So, this BTR enterprise likely benefits both the investors and renters simultaneously.

      Driving forces that brought a huge demand to BTR – Rental Housing.

      • Over the past twenty years, the number of tenants in cities/towns has increased rapidly in India. Renting houses has become mainstream for both families and youth(students and jobholders). Apart from affordability, studies have shown that several people rent by choice; choosing flexibility and a central location over a substantial mortgage.
      • Occupancy rates for Build to Rent developments can be up to 2.5 times faster than those built for sale. Rental developments are therefore a superb way for accelerating the delivery of a huge number of units at a price economical to the local needs.
      • With much faster occupation rates, a sense of community is often achieved more quickly with Build to Rent developments. Whereas it takes a while in case of Build to Sell since sales are usually phased and it depends on the rate of occupancy.
      • With privacy, quality, convenience, and luxury, these BTR neighborhoods will check off all the boxes on the renter’s bucket list. This offers the millennials the kind of work-play-live lifestyle they crave for. This scheme also sets the millennials free from their long-term financial burdens as they are available at affordable prices.

      Why Are Investors Looking Up To Build To Rent (BTR)?

      Putting a couple of homes in under one location makes property management much simple and much less expensive. These homes will be built in vicinal belts and sold in bulk to large-scale investors.

      Any investor looking to retain the capital value in its asset while also minimizing operating costs will try and create a sturdy project which satiates both purpose and durability. Therefore, to be financially successful, BTR developments are more likely designed to meet the tests of time. They focus on the viability of homes(in the long-run) instead of just building them up. By offering a top quality product, Build to Rent developers can improve both their reputation and that of the renting model.

      Benefits Of BTR :

      1. BTR homes are designed specifically to create more like a community and often include amenities and services of convenience to make life a little bit easier. These can include everything from rooftop bars, gyms, pools, private cinemas, etc. and some will even offer a laundry and cleaning service too! To put it brief, the aim is to make life as simple as possible for tenants.
      2. Since net profit will always depend on the extent of operating costs, it is unusual for rents to travel down over time, especially in urban areas. Therefore, it should be possible to foresee the annual cash flow certainly with some metrics. So, there would be a gentle income whilst retaining capital growth.
      3. Build to Rent homes have longer tenancy options like over three years and also the rent will not have a sudden unfair hike. Also, they don’t charge up-front fees apart from deposits and rents in advance.
      4. Amenities can be an honest way for any developer to increase their income, by offering services such as a gym, pool, theatre, which will be factored into the rent. It is often less expensive to barter a reduction with local businesses, which may be offered to residents at no cost to the landlord and permits flexibility if circumstances change.

      Build to Rent features a key role to play in providing quality, affordable homes to people who can’t make it on to the housing ladder. It’s been sufficing as a solution to the housing shortage. Also, the number of large-scale Build to Rent developments is increasing, particularly within the major urban centers, despite the initial concerns over financial viability.

      Moreover, tenants are searching for effective property management and security, which BTR provides. BTR has made searching apartments for rent(be it single house apartments, 3 bedroom apartments, fully furnished houses, etc)  an effortless process. These factors made BTR a breakthrough in rental housing.

      BTR FAQ's:

      Investors tend to view BTR prospect as an attractive venture. These projects are constructed as a tract of rental homes that don’t go onto the market directly but are rented out after completion. Investors render BTR as a stable and long-term income stream.

      Build to rent projects are designed likely to captivate the youth/millennials and also families whose occupancy could be short-lived. It’s generally a hidden concern to the developers to deal with the inconsistent occupants since they should maintain and reimburse the maintenance charges while the apartments are vacant.

      GST and hostile land taxes are also a concern for the BTR market. A build-to-sell developer can reclaim this GST tax from consumers whereas a build to rent developer cannot reclaim from his tenants. So, this causes a loss to the developer.

      The following are a few factors that every developer or any individual should consider while leasing out their property:

      • Ascertain all the prevailing rental values of similar properties in the location of that particular property so that our property value will neither be classified as overvalued nor as undervalued
      • Leasing to the right tenants- Do check the credit histories of the tenants. once you find the right tenant, ask for a reasonable security deposit, and arrange an appropriate payment schedule
      • Make a pact about the lease-term, increments, maintenance, and repair costs to avoid misunderstandings in the upcoming days.
      • Before renting the house, make sure all the utilities(geyser, electricity, etc)in the house are faultless and effortless to use.
      Assetmonk Investment
      Sign up for smart insights from industry experts!
      Invest Now