It comes as no surprise that the development of build to rent projects has increased exponentially over the years. With unreasonably high prices generally associated with ownership, more and more people are adopting the scheme despite any financial concerns about the overall viability. In this way, it not only serves as a solution to the housing shortage but a potentially lucrative venture for both investors and developers alike. To this end, here are just a few benefits of the build to rent approach.
- Perpetually growing market
Over the past two decades, the number of individuals who choose to rent has grown to around eleven million from four million, which essentially means that at least one in five are currently renting. It has become much more mainstream in this day and age more than just merely a temporary place of residence. Apart from the obvious affordability, studies have also indicated that most people would rather rent over shouldering the financial commitment of a mortgage.
- Quicker rates of absorption
When compared to housing projects built for sale, build to rent developments are usually more than twice as fast when it comes to absorption rates with some schemes being able to achieve staggering averages of sixty units a month. What this essentially means is that the build to rent approach is effective in delivering larger numbers at prices that are better suited to the needs of the location.
- Consistent cash flow without depreciation
The conventional models for valuation do not generally apply to the build to rent approach. Instead, these are typically valued by their own respective merits, and a big part of this is the potential for achieving income in the long term. Despite the fact that operating costs will ultimately determine the overall net profit, it is highly unlikely and unusual for time to take a toll on the price of the rent.
- Additional amenities
There are a number of ways in which developers and investors alike can increase income, and the simplest and most effective way of doing so is in the addition of amenities not unlike a laundry or gym. While these smaller businesses will undoubtedly have to be factored into the operational costs and the rent, one way to get around the increase in expenditure is to negotiate with third-party business owners. This way, the services can be acquired by the renters at no additional cost.
Build to rent developments are long-term investments that may yield a host of potentially lucrative benefits that their alternatives are unable to give, but keep in mind that the general rule of thumb in these projects is to always seek developmental consultancy services first. No matter how experienced you may be, acquiring services from companies such as native property management can help mitigate any potential losses in the venture and increase profit margins greatly, solidifying your investment or the developmental project in years to come.
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