Why Build to Rent Works for Investors

build-to-rent

The buy-to-rent concept has been around many years with our brethren from across the pond, and now this investment mindset is gaining steam in the United States.

In Britain, what’s called “buy-to-let” is an investment strategy with a long history. It’s not uncommon for Brits to focus on rental home purchases as an investment, even before looking at stock and bond portfolios.

For Americans, stocks and bonds have been an integral part of investment planning for decades and, to be sure, they can be a great investment for wealth building. Real estate investment, particularly buy-to-rent investing, offers an excellent opportunity for investors to build wealth, save for retirement, and diversify their portfolios.

Individual investors smartly seized on the opportunity to buy low-priced homes in the wake of our nation’s housing downturn, but those without ready cash did not have the opportunity to fund new acquisitions or unlock equity from their existing real estate portfolio. Many of these purchases were turned into long-term buy-to-rent investments.

While rental investors now have some new and exciting financing opportunities available for buy-to-rent properties, some limits remain.

Freddie Mac only allows financing for up to four properties, and while Fannie Mae-approved lenders will occasionally lend on up to 10 investment properties it’s extremely difficult for most investors to qualify for financing on more than four homes. Hard-money lenders have funds readily available, but for a price. Some community and regional banks will consider investment property loans, but since so many got burned during the housing crisis, they are much more hesitant to lend today.

Buy-to-rent is a viable alternative for Americans who want to hedge their investment portfolios with a safe, conservative asset that should continue to garner a high rate of return. The 9 Core Realty team is excited to help both new and experienced investors that want to explore the unique investment opportunity from rental property investing.

 

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