NRHC: Why Georgia Build-To-Rent is Thriving

Atlanta Real Estate Forum Radio

The build-to-rent (BTR) sector is wildly successful throughout the Southeast, mainly due to its flexibility, pricing and amenities. While still a relatively new industry, its contribution to the housing market thus far makes it a popular choice for renters, home builders and residential developers. David Howard, chief executive officer with the National Rental Home Council (NRHC), joins Host Carol Morgan on the Atlanta Real Estate Forum Radio podcast to discuss the role of BTR communities in the Atlanta market.

Why BTR?

Instead of renting a two-bedroom apartment in the city, residents can select a rental with the perks of a traditional, new home community. Popular amenities at BTR communities include clubhouses, pools, dog parks, walking trails, playgrounds and sports courts. These rentals come in all shapes and sizes, from three- and four-bedroom single-family homes to stylish townhomes.

“I think people love the flexibility,” shares Howard. “We call them renters by choice, because they’re choosing to rent.”

What factors impact the “renters by choice” mindset? Howard explains that many renters are not necessarily looking to downsize; often, it’s their goal to “right-size.” They are moving to a home with just enough room for their lifestyle. Lawn maintenance is usually included, and onsite maintenance ensures that residents don’t have to make repairs or even change lightbulbs, providing the low-maintenance lifestyle that renters seek.

“This is not a one-size-fits-all opportunity for residents and families,” said Howard. “You see empty nesters, seniors, singles and families with young kids. You see families with older kids. It’s really an interesting mix of residents in these communities.”

Build-to-rent communities offer residents affordable housing in desirable locations. Families often move in to put their child in a highly rated school district, while empty nesters choose to rent because it gives them freedom to travel without worrying about the grass growing too high.

Housing Statistics

Historically, one-third of households rent, and the remaining two-thirds of households own their homes. Of course, this was easier for renters and homebuyers when homes were smaller and cost less. For example, in 1982, 40% of homes sold were starter homes at 1,400 square feet or less and the average home cost around $68,500. These homes don’t exist today. From 2010 to 2020, Georgia’s population increased by 1 million people, but during this time, the state only added 300,000 in housing stock.

Impact of BTR Communities

BTR development is still new, bringing a fresh perspective to for-rent construction and also some skeptics. Historically, there have been for-sale home communities and rental apartment complexes, but not much in between. BTR communities bridge that gap with expansive, single-family home communities like never before.

Of course, there are always NIMBYs and from Howard’s perspective, the best way to calm uncertainties is through education.

Howard said, “We’re spending a lot of time trying to educate the media, trying to educate policy makers, trying to educate residents about what build to rent is, what it has to offer, what the benefits are, and what its place is across the broader housing spectrum.”

Recently, Georgia legislators launched an investigation into large, out-of-state corporations purchasing homes across the state. There is concern that it’s affecting home ownership and limiting availability for individual buyers, but how much of that is true? Howard emphasizes that home ownership has grown in the last five years and that the biggest threat to home ownership is lack of supply. BTR communities positively impact the home market, just in a different sector than for-sale homes.

Howard said, “We would much rather see policymakers focus on legislation that encourages new home building and makes it easier for people to invest in housing and develop new housing, because the only way we’re going to get out of this is by building more housing.”

Cap Rates

Cap rates are not hindering the market; they just aren’t helping it grow. With mortgage rates at 6% to 7%, the cost of capital makes it difficult for home builders and investors to finance construction. Nevertheless, homes are still being built because the market desperately needs inventory.

Tune in to the full episode to discover more about build-to-rent growth. For more about the National Rental Home Council, visit www.RentalHomeCouncil.org.

About National Rental Home Council

The National Rental Home Council (NRHC) is a nonprofit trade association representing the single-family rental housing industry. Members include owners, operators and builders of single-family rental homes and communities. NRHC has a Georgia chapter, known as the Georgia Rental Home Council.

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