Baby boomers are expected to drive the build-to-rent SFR trend for several years as they retire, move to warmer climates, and demand high-end luxuries.
It’s been well-documented that the single-family rental (SFR) business has been on a hot streak lately. Today, SFRs make up about 6% of all new homes being built in the United States. That number is expected to double in the next 10 years.
Wall Street is taking notice and pouring more money into the sector, creating intense competition for tenants. Anyone wanting to win in the SFR space must have something that sets them apart from all the players entering the fray. One of the most important differentiators is interior design.
Paying close attention to design can pay dividends, whether it’s creating a stacked stone fireplace to enhance a family room’s ambiance or selecting a granite or quartz countertop to create a dream kitchen.
Another reason to pay attention to design is more retiring baby boomers are entering the SFR market. They will push demand for higher-end luxuries.
The biggest change taking place in the SFR industry is catering to higher-end tastes. Several SFR operators have build-to-rent SFR houses to tap into this emerging demand. These houses will be larger and located in more affluent ZIP codes. Larger spaces and higher-end finishes will mean increased rents, likely ranging between $2,500-$4,000.
If you are going to ask for higher rent, you must deliver a property that is truly exceptional. The following are some of the design elements to help you stand apart from the competition.
Most customers demand more open floor plans with sight lines from kitchen to the family room, creating a greater sense of togetherness. They also spend most of their waking time in these two rooms. It’s essential they feature a blend of comfort and luxury.
In a family room, everything starts with the fireplace. The fireplace is often the focal point of the room and needs to set the tone for the overall design. Stacked stone fireplaces create a cozy ambiance, adding to the overall aesthetic and comfort in the room. Wood floors or high-end engineered wood floors are also a nice feature for families with children and pets.
Most realtors will tell you the kitchen and bath can make or break a sale. It’s no different for SFR homes. In the kitchen, granite countertops, stainless steel appliances, tile backsplashes, 42-inch cabinets, and recessed lighting are popular. Beautiful kitchens are aesthetically important, but kitchens also need to be functional. Design kitchens so tenants can prepare meals in an area that would make Gordon Ramsay proud!
In the bathrooms, tenants look for fully tiled showers and tubs, high‑end fixtures in the sink, and recessed lighting in the ceiling.
The ability for more people to work from home has created demand for rental homes in suburban and even rural areas. More families are looking for these higher-end rental homes and often make decisions with their children in mind. These families are looking for larger lots with room for children and pets to run and play.
The build-to-rent SFR market continues to evolve at a rapid pace. It is no longer considered a “fleeting fad.” Today, and likely for the next several years, developers are expanding in large-scale, well-established master-planned subdivisions. Baby boomers are expected to drive the trend for several years as they retire, move to warmer climates, and demand high-end luxuries. Investors, developers, and builders who pay attention to design details will win in the end.
Bruce McNeilage is the CEO and co-founder of Kinloch Partners and a partner in Harpeth Development. A passionate advocate for housing affordability and homeownership, he invests heavily in Nashville, Tennessee, as well as throughout the southeast. Learn more about his projects, including single-family built-to-rent communities and the Solo East and North condominium projects at www.Kinlochpartners.net.
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