One of the newest trends in real estate investing is building single and multi-family homes for the purpose of putting them in a rental portfolio. There are many reasons why now might just be the time to jump in on this trend.
Nationwide, rents are quite high vs other times in history. Renters struggle to find good homes at reasonable prices. It’s hard to think of a time when rents were as high as they are right now. With home prices increasing and rehab property inventory incredibly low, the trend of “build-to-rent” is quite hot right now.
Depending upon the level of finishes that go into the home and the location, it will usually cost about $100 – $155 per square foot in addition to the cost of the land. If builders really work to control costs and use durable finishes, rental homes are usually built at the lower end of this spectrum. In many markets, the cost per square foot for a home to rent might cost more than the cost to construct.
With such a heavy demand for good rental portfolios, several companies that specialize in packaging properties together to sell to larger funds are popping up to take advantage of the market.
Building from scratch is not for everyone. You really have to have the right team in place in order to put such a strategy in action, but the results could be well worth it.