Buying a SFH in a "Build to Rent" Development: Pros and Cons

Out of State Investing
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Buying a SFH in a "Build to Rent" Development: Pros and Cons

Pete Cordero
Rental Property Investor · San Diego, CA · Member since 2016 · 13 posts · 12 votes

Hi All, 

I had a question on which I was hoping the community can give me some insight. If there is already a thread I missed, feel free to direct me. 

I am an out of state investor located in CA. I have 8 rental properties currently and have mainly gone through turnkey providers. I have mainly bought homes are in established neighborhoods and majority owner occupied.  I am looking a new property with a provider that is a new build in a "Build to Rent" community. The development is over 50 units all being sold to investors as rentals. Not all units will be dropped at once, they are being phased 10-12 at a time over a couple years.

A couple of initial questions:

1. Has anyone bought a rental property in a build rent community and what is your experience? 

2. What are pros and cons and differences compared to a mixed neighborhood of rentals and owner occupied. 

Any insight is appreciated as I navigate this decision. 

Thanks! 

Pete

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Bradley BuxtonBusiness Member
Real Estate Agent · NV · Member since 2023 · 1k+ posts · 714 votes
11mo

@Pete Cordero

1. We have sold a few of these to investor clients. The new construction has lower maintenance and they were already rented above market. There was no vacancy. They are located about 20 miles outside so it's a commuter area. So far, there hasn't been much rent growth or appreciation in the last 2 years.

2. How would the cash flow fit into your portfolio? The BTR areas tend to appreciate slower because the value becomes based on the rent growth. What is the job situation? What is the transportation situation? Is there easy access to both. 

We have seen more success with getting incentives from the large home builders Toll, Lennar, and DR horton in traditional areas. This will give more appreciation and sometimes you can get lower rates. It's also easier to exit if you're buying 1-2 units.

A BTR will likely work better at scale with with 10,20,30+ homes that could be sold as a portfolio on the exit. A BTR will have to be sold to another investor, and will they see the value in the investment in 1-5 years?

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  • Bradley BuxtonBusiness Member
    Real Estate Agent · NV · Member since 2023 · 1k+ posts · 714 votes
    11mo

    @Pete Cordero

    1. We have sold a few of these to investor clients. The new construction has lower maintenance and they were already rented above market. There was no vacancy. They are located about 20 miles outside so it's a commuter area. So far, there hasn't been much rent growth or appreciation in the last 2 years.

    2. How would the cash flow fit into your portfolio? The BTR areas tend to appreciate slower because the value becomes based on the rent growth. What is the job situation? What is the transportation situation? Is there easy access to both. 

    We have seen more success with getting incentives from the large home builders Toll, Lennar, and DR horton in traditional areas. This will give more appreciation and sometimes you can get lower rates. It's also easier to exit if you're buying 1-2 units.

    A BTR will likely work better at scale with with 10,20,30+ homes that could be sold as a portfolio on the exit. A BTR will have to be sold to another investor, and will they see the value in the investment in 1-5 years?

    2Reply
  • Jimmy LieuBusiness Member
    Real Estate Agent · Columbus, OH · Member since 2019 · 3k+ posts · 2k+ votes
    11mo
    Quote from @Pete Cordero:

    Hi All, 

    I had a question on which I was hoping the community can give me some insight. If there is already a thread I missed, feel free to direct me. 

    I am an out of state investor located in CA. I have 8 rental properties currently and have mainly gone through turnkey providers. I have mainly bought homes are in established neighborhoods and majority owner occupied.  I am looking a new property with a provider that is a new build in a "Build to Rent" community. The development is over 50 units all being sold to investors as rentals. Not all units will be dropped at once, they are being phased 10-12 at a time over a couple years.

    A couple of initial questions:

    1. Has anyone bought a rental property in a build rent community and what is your experience? 

    2. What are pros and cons and differences compared to a mixed neighborhood of rentals and owner occupied. 

    Any insight is appreciated as I navigate this decision. 

    Thanks! 

    Pete

    Hey Pete, great questions and sounds like you’ve built a solid foundation already. Build-to-rent communities can work, but one thing to think about is tenant quality and stability when every house around you is also a rental—sometimes those neighborhoods can feel more transient since there aren't owner-occupants invested in the long-term feel of the community. That can impact things like turnover rates and how well the area is maintained, depending on who is managing the community and the tenant mix. That said, brand-new construction can mean lower maintenance upfront and strong initial appeal. Personally, I prefer markets and neighborhoods with a mix of owner-occupied homes and rentals because it usually helps values, pride of ownership, school desirability, and long-term appreciation. For example, I moved from Portland to Columbus Ohio in 2020 to invest and now own 10+ rentals here, and the majority of my best performing assets are in areas with a blend of homeowners and renters. Columbus has been really strong for cash flow and long-term growth thanks to huge job and population growth, big companies like Intel, Amazon, Google, Meta, Honda, Microsoft, and LG building here, and you can still find deals in the $120–180k range hitting the 1% rule. If appreciation and long-term durability of the neighborhood matter to you, that owner-occupant mix is something worth weighing. Happy to connect and answer any questions you have!

    [email protected]614-300-7535
    Jimmy Lieu, Red 1 Realty4.9120 Reviews
    WebsiteView Page
    0Reply
  • Todd AndersonPro Member
    Real Estate Agent · Cape Coral, FL · Member since 2023 · 392 posts · 175 votes
    11mo

    @Pete Cordero,

    Great question.  It sounds like you have done great getting the portfolio that you have.  

    I have experience with both types of Build to rent, in a community and in a regular neighborhood, but I have not been involved in a single fam BTR community that has sold to other investors. I think that you may not see the appreciation that you would on the other SFR's that you have that are in communities that have owner occupied houses.

    The BTR communities that I have had experience in were made up of duplex or quads. They all have an association to take care of the common area. The difference in this association is that it was kept by the building organization and not individual owners, so the prices were kept low. You should look into what the association set up is. The benefits of a BTR community of quads or duplexes is that they're all ready looked at as investment properties. That is ultimately their highest and best use. With a community of SFR, when you want to exit the investment, will a highest and best use still be as a rental or will it be as single-family?

    When buying SFR's in a turnkey BTR in an ordinary neighbourhood, you have multiple ways to exit. He might find a buyer who is interested in a rental property and would like to see your numbers. Or you may find that you will get your best price from somebody who will occupy the property.

    I find your situation very interesting and would love to find out more about it. If there are any more specific questions, feel free to reach out.

    Best of luck.

    [email protected]651-492-5652
    1Reply
  • Arman AhmedPro Member
    Real Estate Agent · Columbus Cleveland Dayton, OH · Member since 2024 · 2k+ posts · 941 votes
    11mo

    @Pete Cordero

    Pete, I've seen a lot of investors weigh "Build to Rent" communities versus traditional mixed neighborhoods, and here's the practical take: these new developments give you modern, turnkey-ready homes that need minimal rehab, which is perfect if you want consistent cash flow without the headache of repairs. Tenants are often drawn to newer homes with modern layouts and amenities, so vacancy and turnover risk can be lower. The downside is cash-on-cash might be slightly lower than in established areas, and appreciation can be slower at first, plus you won't get the stability that comes from a mixed owner-occupied neighborhood. The key is to really vet the provider's management team, HOA rules, and long-term plans for the community, because investor-heavy developments can have strict regulations or fees. For out-of-state investors, this model can be a highly efficient way to scale quickly while keeping things almost hands-off, especially if you're aiming to grow your portfolio systematically.

    If you want, I can also share a few strategies to target undervalued off-market opportunities in similar Midwest communities that can outperform turnkey buys—these often give both strong cash flow and appreciation potential.

    [email protected]614-418-6081
    0Reply
  • Pete Cordero
    OP
    Rental Property Investor · San Diego, CA · Member since 2016 · 13 posts · 12 votes
    11mo

    Thanks all, very helpful info. 

    Yeah, this 60 unit development is in a suburb of Oklahoma City, which I like as a metro. So overall a good area, but I was just trying to think through being in a development of SFHs where all the units are rentals (at least initially). I was looking to secure only one of them.

    For now I landed on a rehabbed turnkey SFH in a neighborhood and street with majority of owner occupied through a provider I work with often.

    @Jimmy Lieu and @Arman Ahmed, Columbus is on my list that I'd like to explore. I'll DM you all for some details. 

    Thanks! 

    Pete

    1Reply
  • Ben ScottPro Member
    Property Manager · Oklahoma City, OK · Member since 2019 · 579 posts · 351 votes
    11mo

    Hey @Pete Cordero, OKC broker here. Curious where this development is? Lennar/Rausch Coleman?

    0Reply
  • Pete Cordero
    OP
    Rental Property Investor · San Diego, CA · Member since 2016 · 13 posts · 12 votes
    10mo

    @Ben Scott

    I tried to send you a DM, but maybe because we are not connected, I was not allowed. I sent a connection request as I really like the OKC area.

    The development I mention above is in Guthrie. I have 2 rental in Yukon, which I love that area. I look for 3/2s in good neighborhoods. I Try to target turn key properties <225k since i am out of state and work full time. Let me know if what you think of Guthrie and other areas I should be looking. 

    Thanks Pete

    0Reply
  • Rhett TullisBusiness Member
    Property Manager · Oklahoma City, OK · Member since 2013 · 1k+ posts · 617 votes
    10mo

    I am always hesitant on build to rent neighborhoods.  The issue in the future will be if/when you decide to sell it will have a bit of a stigma with all but other investors.  Also you might have alot of competition during leasing season with every other home in the neighborhood being a rental.  That will certainly skew the vacancy rate of the neighborhood much higher than your typical neighborhood.

    [email protected]405-283-6522
    Integrity Oklahoma
    WebsiteView Page
    2Reply
  • Pete Cordero
    OP
    Rental Property Investor · San Diego, CA · Member since 2016 · 13 posts · 12 votes
    10mo

    @Rhett Tullis, yup, these were some of the concerns I had as well. For now, I've opted for a SFH in an established majority owner occupied neighborhood,

    Thanks for the insight

    1Reply
    • Jules Aton
      MD/DC · Member since 2024 · 1k+ posts · 1k+ votes
      10mo
      Quote from @Pete Cordero:

      @Rhett Tullis, yup, these were some of the concerns I had as well. For now, I've opted for a SFH in an established majority owner occupied neighborhood,

      Thanks for the insight

      Smart choice. In my opinion neighborhoods that are mostly owner occupied are not only nicer but also easier to resell. 
      0Reply
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