Navigating the current housing market presents significant challenges, with soaring mortgage rates and record-low inventory levels. For potential homeowners, the barriers to entry are substantial. A Zillow report from February highlights that new homeowners need to earn over $106,000 annually to buy a home in the U.S., an 80% increase from what was projected in 2020. As mortgage rates hover around 7%, the average monthly payment exceeds $2,000, putting homeownership out of reach for many, particularly young millennials and Gen Z individuals. This situation has led to a growing trend: rental property investing, specifically in the build-to-rent (BTR) market.

The Rise of Build-to-Rent Market

The build-to-rent market is an emerging sector in real estate, offering a new avenue for property investment. Build-to-rent refers to purpose-built communities of single-family homes available for rent. These communities often feature amenities and dedicated property management, providing an attractive alternative to traditional apartment living. As of now, there are approximately 340,000 BTR homes, with expectations of adding between 50,000 to 60,000 new homes this year, although this is a decline from a peak of 90,000 homes a few years ago​​.

Why Invest in Build-to-Rent?

Build-to-rent properties cater to a broad demographic, including millennials who are outgrowing apartments and seeking more space and privacy. These properties offer a solution for those blocked from homeownership due to high mortgage rates. The rental prices for BTR homes are comparable to apartment living, especially in like-for-like locations. However, BTR homes provide the added benefits of more space, privacy, and a community feel, making them an appealing choice for families​​.

Memphis: A Hotspot for Rental Property Investment

Among the various markets, Memphis stands out as a prime location for rental property investment. Memphis Investment Properties (MIP) offers unique opportunities for investors looking to capitalize on the growing rental market. Memphis boasts a strong rental demand, driven by factors such as a large population of young professionals and families, a thriving job market, and relatively affordable living costs compared to other major cities.

Advantages of Investing in Memphis

  1. High Rental Yields: Memphis offers attractive rental yields, making it a profitable choice for investors. The city’s lower property prices combined with strong rental demand translate to higher returns on investment.
  2. Steady Population Growth: Memphis has been experiencing steady population growth, further fueling demand for rental properties. The city’s economic stability and job opportunities attract both domestic and international residents.
  3. Diverse Economy: Memphis has a diverse economy with key industries including transportation, logistics, healthcare, and education. This economic diversity ensures a steady flow of tenants from various sectors, reducing the risk associated with relying on a single industry.
  4. Investor-Friendly Environment: Memphis is known for its investor-friendly policies, including relatively low property taxes and favorable landlord-tenant laws. These factors make it easier for investors to manage their properties and maximize their returns.

The Role of Memphis Investment Properties

Memphis Investment Properties plays a crucial role in helping investors navigate the complexities of the rental market. They offer comprehensive services, from property acquisition to management, ensuring that investors can enjoy passive income without the hassle of day-to-day property management. MIP specializes in turnkey rental properties, meaning they handle the entire process, including renovation and tenant placement, providing a seamless investment experience.

Long-Term Prospects

The build-to-rent model is expected to have long-term viability. Institutional ownership of single-family rentals currently stands at only 5%, despite single-family rentals comprising about 11% of the total housing stock in the U.S. With approximately 15 million single-family rental homes nationwide, there is substantial room for growth in institutional ownership​​.

Furthermore, the build-to-rent market is expanding significantly in Sunbelt states, including Tennessee, which offers favorable conditions for business growth, employment opportunities, and population increases. Memphis, with its strategic location and economic advantages, is poised to benefit from these trends​​.

The current housing market dynamics present significant challenges for homebuyers but also open up opportunities for rental property investors. The build-to-rent market, particularly in thriving locations like Memphis, offers a viable and profitable investment avenue. Memphis Investment Properties stands out as a key player, providing investors with the tools and support needed to succeed in this growing market. As mortgage rates remain high and homeownership becomes more challenging, rental property investing in Memphis is not only a smart financial decision but also a timely one.