The build-to-rent (BTR) sector is seeing somewhat of a purple patch at the moment. There are now more than 150,000 developments either completed, under construction or in the planning stage, as the number of BTR homes increases by more than 50%.
For developers, the BTR model is proving to be a profitable alternative to the traditional way of selling units individually. Where the current sales market is showing uncertainty in some areas, the demand for rental accommodation continues to rise.
Yet, developers who go down the route of transforming their development into a BTR property will need to ensure that they maximise the cost per lease-up. Which begs the question: what methods should developers use to fill their properties without spending an arm and a leg?
Here’s how to reduce cost per least up as a build-to-rent developer.
Reduce your cost per lease with offers
At first, offering incentives to renters in the form of money-saving features might seem counterproductive. But dig a little deeper, and it can prove to be a long-term sustainable strategy for reducing overall cost per lease.
Many developers have gone down the route of giving the first month’s rent away for free to renters, hoping to fill up units faster. The idea being that renters will stay for the long term once they have settled into their new place.
Some BTR developments have also gone down the route of providing utilities like heating, water and even broadband for free. Again, while this might seem like an added cost, developers still stand to earn more in the long term from premium rental prices – especially in BTR developments in larger cities.
Implement a technology-led strategy
Technology is key for many sectors as it simplifies processes, making everything that little bit easier for those involved. We’ve seen it in the banking sector with the removal of mass branches and the implementation of 24/7 access to our finances. It’s also proved wildly popular in the ride-hailing industry, transforming how we get a taxi or cab service.
Build-to-rent is one of the primary tech adopters in the property world, with tenant apps that let renters manage their in-life tenancy. Without the inclusion of tech, any BTR project will likely struggle: today, renters are becoming more tech-savvy and demand seamless solutions to their problems.
Being able to do things like report repairs, see an order update for maintenance and interact with other tenants through an app all contribute to a seamless tenancy. Happier tenants will stay longer, thus adding more value to each of the leases as voids drop and turnover decreases.
A greater focus on service
Again, creating an enjoyable in-life tenancy is one of the biggest sells for build-to-rent, so the service has to be reflective of that found in other high-service sectors, such as hotels. Fortunately, technology also enables a better service from team members who are in the building or working externally.
With an app that allows tenants to communicate with team members and report repairs easily, staff can focus their efforts on providing an A-star service that helps maintain tenant happiness. This includes aspects like working on events for residents and providing more personalised services.
Long-term thinking is required if developers want to reduce overall costs per lease-up. That means tenant happiness needs to be at the front and centre of any strategy.
Explore different marketing tactics
Drumming up interest around your development requires its own marketing strategy, which can be expensive. However, there are some methods worth exploring that don’t require substantial campaign budgets and can still act as a driver for attracting renters.
Social media is an obvious place to start and, when used correctly, can be an effective way of appealing to renters. With more people heading to a social network to get their daily consumption of, well, pretty much everything, advertising your BTR development could prove to be a smart and inexpensive way of marketing your homes.
Creating regular content around the development can also work for piquing the interest of renters. Build-to-rent communities are all about the lifestyle, and if a developer can show that they’re in touch with the needs of modern renters, they will likely be more receptive to moving into the building.
Maximising your opportunities to drive down costs
There is no magic one-size-fits-all formula for driving down the cost of each lease-up. But with a focus on aspects like using technology, creating offers and focusing on the needs of the core demographic, it’s possible to save in the long term on leases. Happier renters who are ready to play the long game will stay in a place for many years, resulting in lower overall costs per lease.