Australian Property

Why You Should Consider Build To Rent If You Want To Invest In Australian Property

Real Estate 5 Mins Read January 15, 2024 Posted by Mony Shah

Investing in any type of Australian property is a decision that requires careful consideration of several factors, while if you were looking for a great opportunity, then you could consider building to rent.

Moreover, across the dynamic Australian real estate market, emerging trends like Build to Rent, or BTR as it is otherwise known, are catching the attention of astute investors who are looking for a fantastic opportunity.

So, let?s get started on this comprehensive guide?

Reasons To Consider Build-To-Rent In Australian Property

Likewise, if you are contemplating your next move in the property arena in Australia, you should continue reading to learn about three compelling reasons why you should seriously consider build-to-rent as a viable investment option.

Hassle-free investment opportunity

Firstly, build-to-rent offers you a unique and hassle-free investment opportunity, which is very different from the traditional property market in which being a landlord often involves the intricacies of managing individual properties, addressing tenant concerns, and ensuring the maintenance of each unit.

However, with the build-to-rent, this landscape has shifted dramatically while you will be able to invest in a purpose-built, professionally managed development that has been specifically designed with the needs of the tenant in mind.

This means you will be able to enjoy the benefits of property ownership without the day-to-day responsibilities of being a hands-on landlord. The dedicated management team will be able to take care of everything from property maintenance to tenant relations, allowing you to sit back and watch your investment grow over a period of time without the headaches that are often associated with traditional types of property management.

Stable and consistent income stream

build to rent in Australia

Secondly, build to rent in Australia can offer investors a stable and consistent income stream. Moreover, in the volatile world of investments, stability is a sought-after trait while build-to-rent projects are structured to provide a steady and predictable income through long-term leases.

Unlike the potential fluctuations that occur in the rental sector, build-to-rent developments typically offer investors a stable and recurring amount of revenue. This level of consistency is particularly appealing to investors who are seeking a reliable return on their investment, making it an attractive option for people who value financial predictability in their property portfolio.

Changing preferences and lifestyle

Lastly, investing in build to rent properties in Australia aligns with the changing preferences and lifestyles of the population across the country. Indeed, the modern Australian tenant is increasingly valuing flexibility, community, and amenities, while build-to-rent developments are designed to cater to these particular preferences.

Likewise, by investing in a property that provides not just a home but a lifestyle, you will be able to position yourself to attract a diverse range of tenants.

Therefore, to summarise, build-to-rent presents a compelling investment opportunity for people who are looking to enter or expand their presence in the Australian property market.

What Are The Primary Challenges In Constructing A Build-To-Rent Project?

The contemporary real estate environment consists of various risks, out of which the build-to-rent has to be on top. Here are some of them, identifying which will help you to seek solutions beforehand:

Scope Of The Project

In almost all development projects, determining its scope is critical. Here, robust project planning is important to prevent the chances of incomplete, substandard, or even unfit work. In order to reduce scoping issues, planning the project thoroughly is important. 

As a broker, you might have to build a thorough engagement with potential builders at the tender phase. This will ensure on-time delivery and flexibility of construction options.

Building Contracts Negotiation

Drafting contracts like Operations and Management (O&M) is the key point of risk management as well as its mitigation. Significant contractual considerations are loss exclusions and role delineation. 

The market for mid-sized and smaller developments generally relies on Australia Standard Contracts. Although, a whole-of-project approach can also be helpful for a build-to-rent sector. 

The Cost Of Construction

Increasing costs of construction have an impact on developers as they place too much pressure on the edges. However, economic stress is also increasing all through the subcontracting and supply landscape. It might create sudden shocks in the entire progress along with the delivery cost. 

One of the primary reasons behind the increase in construction costs is inflation, which causes supply chain complexities. In fact, the labor market is too tight, and there?s barely any room for flexibility. Clients usually do not like when the construction market is too rigid with its options. 

Which One?s Better: Build-To-Rent Or Build-To-Sell Projects?

To put it simply, build-to-rent refers to a ground-up real estate development that appeals to the property market and not buyers. On the other hand, build-to-sell refers to a ground-up development that appeals to the entire homeownership industry. Those who wish to take the entire responsibility of their house generally opt for the latter option. 

Since renting is very popular in Australia, homeownership is a dream for various natives. The latest census of the country shows that 30.9% of the population has rented houses. The results, when tallied with the previous year?s census, proved that the figure had risen considerably. 

In various cases, build-to-rent apartments and homes belong to expert-managed communities. A lot of investors choose to purchase lots in one BTR development. The rental industry is not too volatile, like the buying market. Hence, the asset class consists of a balanced cap rate of between 4.75 and 5.5%. 

The Bottom Line

From the ease of management and stable income to aligning with evolving tenant preferences, the benefits of build-to-rent are obvious, as you contemplate your next move, it is imperative to consider the innovative and lucrative prospects that build-to-rent can offer.

So, that was all about build-to-rent properties and the various aspects encompassing it. If you liked this article and found it informational, make sure to comment below and share your thoughts. Also, keep following us if you want to see such a useful guide. Thank you for reading!

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