The rising cost of homeownership, increased rental demand and the availability of remote work continue to support the growth of the build-to-rent (BTR) real estate model. As a subset of the single-family rental class, BTR is a small but fast-growing portion of the housing market.
Build-to-rent housing is attracting institutional and individual investors, but whether it comes to dominate the real estate market is up in the air. Here’s a deeper look into this burgeoning segment.
What Is Build-to-Rent?
Build-to-rent housing is a community of single-family homes, townhouses or multiplexes constructed specifically for renting under one property management company. It offers renters the privacy and space of single-family living with the amenities typically found in a multifamily apartment complex, such as swimming pools, fitness centers and dog parks.
BTR real estate is designed with the tenant in mind, providing modern features that they can’t find in a traditional single-family rental. Unlike multifamily apartments, units share fewer or no walls, so the residents have more privacy.
For investors, build-to-rent homes can provide stable cash flow. Tenants typically sign long-term leases of two to three years, or sometimes as long as five years. Multifamily units often rent for six months to a year.
In 2024, the BTR market hit a historic high, with 39,000 U.S. homes finished to completion, a 15.5% increase over the previous year.
As BTR continues to grow, investors are trying to figure out how the fundamentals of this relatively new asset class work and how to be smarter about their future investments.
Three investing models have emerged:
- Vertical integration: One organization controls the entire process.
- Contractor: An investor finances the project and contracts a builder.
- Partnership: A builder acquires the land and partners with investors.
Real estate professionals believe the BTR market is maturing and more investors will enter the market once they are better able to evaluate more projects and predict returns.
Why Build-to-Rent Is Booming
A combination of factors among renters and investors is fueling the boom in build-to-rent housing.
As mortgage rates hover around 7% and housing prices rise, buying a home is unaffordable for many Americans. Meanwhile, millennials and Gen Z prefer renting for flexibility, mobility and modern amenities, and remote workers are escaping expensive urban cores for more space and affordability in the suburbs.
Investors are drawn to build-to-rent housing because of the steady revenue stream and low tenant turnover that long-term leases can provide. For institutional landlords, the development of multiple units within a community creates economies of scale and simplifies management. Several large, publicly traded real estate investment trusts (REITs) also own BTR properties for liquidity and diversification.
As high interest rates and high housing prices slow the construction of new homes for sale, some builders are pivoting to BTR, including the nation’s largest homebuilder, D.R. Horton. Lennar Corporation, Taylor Morrison, NexMetro and others are also seeing the potential in build-to-rent.
What Experts Are Saying
Jessica Lautz, deputy chief economist and vice president of research at the National Association of Realtors, posted to the NAR’s website in February 2025 that the median age of first-time homebuyers had hit 38, a new high. As potential buyers are priced out of the market, she noted that it opens the door for more build-to-rent housing.
In its annual survey of housing market professionals for 2025, Fixr.com said that 53% of real estate pros believe rising housing costs associated with tariffs will drive a greater demand for BTR housing in 2025. Fixr.com estimated 130,520 build-to-rent home starts in 2024 — an increase of 134% since 2019.
In that same report, Ryan Kang, founder of housing data provider Market said a significant influx of institutional capital has entered the BTR sector to meet the rising demand. “We’ve seen this trend firsthand through our own clients; many of [them] previously focused exclusively on traditional multi-family investments and development [but] are now showing growing interest, and in some cases reallocating capital, toward the build-to-rent space,” he said.
Robbie English, managing broker and Realtor at Uncommon Realty, blogged about the long-term consequences of build-to-rent, calling a BTR-dominated market complex and multifaceted.
“As this trend continues to evolve, it will be crucial for homebuyers, investors, and policymakers to stay informed and proactive in addressing the challenges and opportunities that arise,” he posted on RobbieEnglish.com.
And while BTR properties make up just 7% of the rental market, Jordan LaMarche, vice president of Maryland-based real estate consultancy RCLCO, said in a recent webinar, “We … think this is still very short of the potential demand for the product type overall.”
Will BTR Dominate the Market?
Looking at the real estate market, 2025 appears to be a year for continued growth in the build-to-rent sector. While it’s unlikely BTR will dominate, it is expected to continue reshaping real estate as it brings large-scale rental housing to states where it was previously uncommon.
More than 110,000 BTR units are being built across the U.S. with fastest growth in the South and Southwest, as Arizona, Dallas, Houston and Atlanta lead the way. Texas, Arizona and Florida are the states with the highest number of rental homes under construction, and BTR units are expected to skyrocket in North Carolina by 152% this year.
Still, build-to-rent communities face challenges. High interest rates have caused developers to pull back. Building a typical community of 200 units can cost about $60 million, creating a barrier to entry for investors and developers who don’t have deeper pockets.
In the last quarter, developers have pulled back significantly on construction starts. However, year-over-year starts were still up 7.8% over 2023.
While they are growing in number, BTR homes make up a small percentage of residential construction — just 7.9%. Some real estate professionals have concerns about worsening housing affordability.
The BTR market mostly targets high-income renters, which can exacerbate housing affordability, drive a further gap between the rental and homeownership markets and push homeownership further out of reach for many. Challenges with regulations and zoning laws in some regions may hold back the development of build-to-rent communities.
Consider Investing in Build-to-Rent Properties
High home prices and increased demand for rentals have contributed to the boom in build-to-rent properties, providing investors with opportunities for stable cash flow. Consider whether BTR real estate fits your investing goals.
Frequently Asked Questions
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Build-to-rent is popular because more renters are seeking the space and privacy typically found in a single-family home without the financial burden of a mortgage and maintenance. BTR homes can provide a modern space with a garage and yard, along with the ease and convenience of renting.
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Build-to-rent homes and traditional rental housing have several differences, starting with BTR housing being built in planned communities specifically to be rented. Traditional single-family rentals are typically older houses, have been purchased from a previous owner and aren’t centrally located with well-managed amenities. They may also lack the professional management of build-to-rent properties.
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Build-to-rent properties are typically less expensive than buying a home because they require much lower upfront costs such as a security deposit and first month’s rent, compared to the down payment and closing costs on a purchased home. However, renters don’t build equity like they would through mortgage payments.
