Build-to-rent (BTR) financing funds ground-up construction of single-family or small multifamily communities specifically designed for the rental market. BTR is one of the fastest-growing segments in real estate, with institutional capital and individual investors both building purpose-built rental communities from the ground up.
Financing typically comes in two stages: (1) a construction loan covering land acquisition and vertical build, priced like hard money at 9-12% with interest-only draws, 12-24 month term, and 65-75% loan-to-cost; and (2) a permanent DSCR takeout once units are complete and leased, at 70-80% LTV based on stabilized rents. Sophisticated BTR investors line up the DSCR exit before starting construction so pricing is locked at the front.
BTR works because new construction avoids the maintenance drag of value-add rehabs, delivers premium rents (tenants pay 10-15% more for new construction), and enables cost segregation studies that generate 25-35% first-year depreciation. Most successful BTR investors are building 2-10 unit clusters on infill lots in tier 2-3 growth markets.
Get a build-to-rent quote or explore our related cost segregation resources.