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Build-to-Rent Housing Attracting Both Developers and Renters

January 04, 2023

Gary Kaleita

In the current housing market, the cost of home ownership is still relatively high even though in many areas home prices have begun moderating. As interest rates rise, fewer people will be able to afford to buy a home, resulting in more competition for rentals, whether apartments or single-family homes.

With this increased demand among renters, Build-to-Rent (BTR) housing presents opportunities and offers benefits for both developers and renters that are worth considering.

Build-to-Rent Increasingly Popular


Many renters are students, single parents, or young families with children, and as such may not have the funds needed for the customary 10-20% down payment on a new home. They may have large student loans to pay off, and their incomes may not have provided them with the savings needed to make the down payment.

At the other end of the spectrum are renters who have retired and have paid off their mortgages, using the proceeds from the sale of their homes to support their retirement.

Lifestyle and Amenities

Regardless of the reason, there is currently a ready market for rental homes of various types. Apartments are attractive to renters, but do not offer the same benefits as single-family homes. While luxury apartment projects can offer amenities like swimming pools, clubhouses and fitness centers, they cost more than traditional, basic apartments.

Single-family homes, whether they are attached (like townhomes) or detached (like stand-alone homes) can offer a different lifestyle for renters, and are typically located in developments that have amenities similar to luxury apartments.

The growing popularity of build-to-rent (BTR) homes can be attributed to a number of factors:

  • Yards for kids and grandkids to play in,
  • Garages,
  • Storage space,
  • A sense community,
  • More options than apartments in terms of square footage.

Rental Rates

Interestingly, rental rates for homes in BTR communities are increasing faster than rental rates in apartment communities. These attributes all justify higher rents than apartments.

Build-to-Rent vs. Homes for Sale


As the market for the sale of single-family homes softens, developers are increasingly considering the construction of BTR communities that are intended to be held by the developer for investment and rented out.

BTR communities have all the attributes of a traditional project with homes for sale (HFS). There is really no difference in the nature or scope of development activities involved in the installation of subdivision infrastructure and the construction of homes. Developers can therefore easily choose whether to develop a project as a BTR or an HFS community.


The financing available for BTR communities differs from traditional financing for HFS communities, since BTR communities are held for long-term investment.

In an HFS community, the developer has a shorter period of time to repay the loan using the proceeds of home sales.

In a BTR community, repayment takes longer because the rental of homes provides the revenue to repay the loan. A developer who typically builds an HFS community will need to shop around to get the best financing terms when deciding to do a BTR community.

Homeowners' Associations

BTR communities still have homeowners’ associations (HOAs), but since the homes are not being sold, the developer retains control of the HOA. Local government codes typically require the HOA to own and maintain common areas, amenities, drainage systems and the like.

The developer funds the HOA budget using the rental income it receives, and the HOA hires a management company to administer and maintain the common areas. The same management company may be used by the developer to collect rents and maintain homes.

BTR communities can be gated, just like HFS communities, thereby offering another benefit to renters (privacy and enhanced security). This means that the internal roads are private and must be maintained by the HOA, leading to a higher HOA budget and increased rents to accommodate that.

Exit Strategies

A particular benefit of BTR communities is that the developer has more exit strategies, providing flexibility for its return on investment. If the developer wishes to get out of the home rental business, or needs some immediate cash, it can sell one or more homes to their renters, or to investors who want the rental income.

In some cases, institutional investors may wish to acquire entire BTR communities to add them to their portfolios.

As BTR communities gain more popularity, developers and renters may want to take advantage of the many opportunities and benefits that this type of housing offers.

This article is informational only. You should consult an attorney before acting or failing to act. The law may change rapidly and no warranty is given. LOWNDES DISCLAIMS ALL IMPLIED WARRANTIES AND WITHOUT LIMITATION, ANY WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE. ALL ARTICLES ARE PROVIDED AS IS AND WITH ALL FAULTS. Consult a Lowndes attorney if you wish to establish an attorney/client relationship.

With more than 30 years of experience in real estate law, including over 20 years as a Board-certified expert in the field, Gary Kaleita has acquired the ability to navigate the complexities of sophisticated real estate deals with relative ease.

Gary has a wide variety of experience in real estate development, finance and transactions, condominiums, property owners’ associations, commercial leasing, commercial lending, and title insurance.

Gary enjoys a reputation for anticipating and avoiding problems, rather than merely reacting to them. He has years of experience handling purchases, sales and financings of commercial and residential projects, including office, industrial, retail, multi-family, single-family, condominium, resort, hotel and golf course properties. Gary has prepared and negotiated contracts for sale and purchase, performed due diligence investigations, and handled all aspects of closings, including issuance of title insurance and legal opinions. He has also performed tax free exchanges (both forward and reverse) under Section 1031 of the Internal Revenue Code, and has handled closings for housing revenue bond financing transactions with the Florida Housing Finance Corporation and various local housing finance authorities.

In the area of real estate development, Gary has assisted developers in obtaining land use approvals, plat approvals and permits for various developments from a number of jurisdictions in Central Florida, including planned developments (PD’s) and Developments of Regional Impact (DRI’s). He has drafted and negotiated complex land use documents, including development agreements, cost-sharing agreements, declarations of covenants, conditions, restrictions and easements. He also has experience in mall and shopping center developments, including outparcels, and has assisted developers with the selection, formation and operation of business entities, including commercial and residential property owners associations. He has extensive experience with the formation and operation of both commercial and residential condominiums as well.

In addition, Gary has established somewhat of a boutique practice by acting as local counsel to help out-of-state lenders, investors and law firms navigate the complexities of Florida real estate law. He is frequently engaged by large national and international law firms needing assistance on a variety of issues for their clients doing business in Florida. Gary regularly provides advice on Florida law and custom pertaining to purchase and sale contracts as well as loan documents, addresses local due diligence issues, answers questions involving titles, surveys and title insurance, and provides Florida legal opinions.

Not just another real estate lawyer, before pursuing his career in law Gary served as a U.S. Naval officer on active duty for 4 years in the Mediterranean Sea, first with a patrol gunboat squadron in Italy and then at a communications station in Greece. During this period he traveled extensively throughout Europe, the Middle East and North Africa. He believes his military experience is the source of the practical approach he has developed to problem solving.

Gary also took the initiative, after a homeowner in his own neighborhood was mauled by a Florida black bear in 2013, of researching what his homeowners’ association could do to limit the likelihood of future attacks. In the process, he became an expert in the subject of “bear-wise” communities and drafted a policy that his own homeowners’ association adopted, thereby becoming the first residential community to be officially recognized as bear-wise by the Florida Fish and Wildlife Conservation Commission (FWC). He has since written and spoken extensively on this subject, serves on the FWC’s Central Bear Management Unit Stakeholder Group, and has become a resource for FWC to educate other communities on the importance of bear-wise practices in areas of Florida containing black bear habitat.

Gary focuses on finding pragmatic solutions to complex problems, recognizing that clients want sensible and realistic advice in a timely manner so they can go about their business.

Chambers USA (2015)* reports that Gary has substantial experience acting as lender’s counsel and is acclaimed by market sources as an “extremely responsive, very practical and reasonable” practitioner.

*We make no guarantees or promises that the reader will realize the same or similar results

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