Sometimes building a home can be difficult enough, but when you add on the need for durability and cost-effectiveness that comes with build-to-rent homes, the lines can start to blur. The key to building a home to rent is tempering lasting materials that look good with cheap materials that cost little. Generally, though, when you buy cheap, you end up spending dollars to save pennies. These are our tips if you are looking to build a build-to-rent home for maximum return. These are the expert tips we shared with RedFin’s
Keep It Simple
When it comes to a build-to-rent home, you want to find a floor plan that is conducive to maximum occupancy that also offers conveniences, like a master on the first floor and enough bathrooms. For simplicity’s sake, always try to keep the floor plan simple, with a great place to entertain, rooms that allow privacy, and enough space for double or bunk beds in bedrooms besides the master. If it is primarily going to be a vacation home, occupancy is going to be a great convenience, as many more people are willing to share for just a night or two versus if they were going to live side-by-side for a while.
Location, Location, Location
If there is one thing that you can’t sacrifice, whether it’s a rental or your forever home, it is going to be the location. You don’t have to buy oceanfront property, but you do want to build a home in a safe neighborhood for a good return on your investment. The location of your property is always going to be guided by the quality of the area and the amenities close by. The same goes for the rental rate. If you are going to go through the rigors and expenses that come with building a built-to-rent home, make sure that if you build it, they will come!
Cheap Does Not Equal Inexpensive
There is a huge difference between cheap and inexpensive. Yes, cheap materials cost less, but they can only take a certain amount of abuse. When you consider that cheap and expensive materials both require someone to install, if you have to replace them, it is going to cost more. So you don’t have to go to the high end of the price range, but do invest in something that will last, or you will probably have to invest again – which means downtime for your rental.
Priorities are Everything
The priorities that you consider when you build a home to live in differ from those that you have for a rental. The niceties that you care about because you will have to look at and use them every day don’t matter to renters. When you are building, don’t go in as a homeowner; go in as a renter and make the decisions that would suffice if you were renting. If you make some upgrades to the focal point, you can downgrade on things that won’t matter to the renter.
Always Weigh Cost with Equity
Everything from your roof to the floors is going to be an expense that you need to look at differently than if you were in it for the long haul. If you intend to hold onto the home for the next 30 years and rent it out, opt for the 30-year roof. However, if you are looking at it as a medium-term investment, put the materials in that will get you through the next decade or so before you have to decide whether to replace or sell. Always look at your decisions from a medium to short-term investment viewpoint, unless you want to retire in the rental yourself.With interest rates on the rise and inventory remaining low, rental rates will probably climb. If you want to invest in a build-to-rent home, then it is all about making wise choices. If you spend too much, you will spend the next several decades digging out. If you balance durability with expense while also making the property look semi-upgraded, you will see a quicker return. At Ragland Homes, we understand the decisions revolving around home building and how you intend to use it for does matter. We can help you throughout the entire build-to-rent process so you come out ahead!