In an environment where housing affordability, demographic shifts, and institutional capital are converging, Build-to-Rent (BTR) has quickly evolved from a niche development model to one of the most sought-after alternative real estate sectors. For wealth managers and RIAs, the strategy offers exposure to the long-term fundamentals of U.S. housing, paired with the income stability of private real assets.
Porter Kyle, a leading developer and investor in the BTR space, has been at the forefront of this transformation—creating high-quality, purpose-built rental communities designed for families seeking space, flexibility, and community without the barriers of homeownership.
Taylor Shultz, Partner at Porter Kyle, unpacks what’s driving investor appetite for BTR developments, how the opportunity aligns with broader portfolio strategies, and what advisors should know about accessing the asset class.
CM: Let’s start at the top — what’s driving the growing investor demand for Build-to-Rent (BTR) communities in today’s market?
TS: Great question: For years we have seen an evolution of would-be homeowners choosing to rent versus own, and the Built-to-Rent space is capturing many of these households. The Build-to-Rent sector is seeing significant growth and investor interest, driven by evolving household preferences and affordability issues.
Build-to-Rent communities attract longer term tenants, leading to more predictable rental income. High tenant demand, particularly in high growth markets, translates to lower vacancy rates and reduced turnover costs. Investors can acquire entire BTR communities, enabling portfolio diversification and efficient management at scale. New construction means lower maintenance expenses compared to older properties or “Scattered Site” single-family rentals.
While rent growth has slowed from the highs of 2021-2022, BTR properties still show higher average year-over-year rent growth than traditional multifamily properties.
CM: How has the recent housing shortage, affordability pressures, and demographic shifts contributed to the rise of the BTR model?
TS: A national shortage of housing units, particularly single-family homes, is fueling demand for BTR. Homeownership affordability challenges, rising mortgage rates, increased home prices, property taxes and property insurance costs are pushing more people into the rental market.
Millennial & Gen Z generations are increasingly opting for the flexibility and lower financial burden of renting over homeownership. We continue to see a shift in home ownership preferences, as life experiences have become more meaningful to the younger generation.
Renters desire more space and privacy (like private yards and direct access garages), and community amenities not typically found in traditional apartments. Remote work trends also increase the appeal of larger living spaces.
CM: In terms of market dynamics, where do you see the strongest regional momentum for BTR developments across the U.S.?
TS: It is no secret that Phoenix, Arizona was ground zero for the Build-to-Rent movement. Often called the “epicenter of BTR,” Phoenix leads the nation in both current inventory and construction, with more BTR units underway than most entire states.
The strongest regional momentum for build-to-rent (BTR) developments across the U.S. is centered in the Sun Belt, particularly in the Southwest and Southeast. These regions lead in both the number of completed units and active pipeline projects, driven by strong demographic and economic fundamentals.
The Texas metro areas have the largest overall BTR pipeline, with major activity concentrated in the Dallas-Fort Worth, Houston, Austin, and San Antonio markets. The Southeast is another key growth engine, with rapid expansion seen in Florida, Georgia, and the Carolinas. The Florida metro areas feature multiple top-performing BTR markets, including Tampa, Orlando, and Jacksonville.
Both Georgia and the Carolinas have experienced explosive growth. Atlanta is a top three BTR market, and robust construction is underway in Charlotte, Raleigh-Durham, and smaller markets like Myrtle Beach. While not as prolific as the Sun Belt, the Midwest is gaining momentum, particularly in more affordable secondary markets like Columbus, Indianapolis and Kansas City.
CM: From an investment standpoint, what makes BTR attractive to institutions, family offices, and RIAs alike?
TS: Build-to-rent (BTR) offers stable, long-term, and scalable cash flow within the residential real estate market. By combining the demand for single-family living with the operational efficiencies of a multifamily asset, BTR communities offer appealing returns and inflation-hedging capabilities.
A national housing shortage, combined with rising home prices and interest rates, has put homeownership out of reach for many. This has created a large and consistent pool of qualified renters seeking BTR homes with more space and privacy than traditional apartments, especially younger generations with families.
The rise of remote and hybrid work has increased demand for larger living spaces and yards. BTR communities are designed to meet this demand by providing desirable amenities like community spaces, parks, and professional property management.
Residential real estate has historically been a relatively safe investment, and the BTR sector has shown resilience even during periods of economic uncertainty.
BTR properties have significant long-term appreciation potential, particularly in high-growth secondary metro areas experiencing strong renter demand. BTR allows investors to diversify their real estate portfolios with an alternative that offers long-term income and stability, balancing other assets with different risk profiles. Like other real estate, BTR communities can serve as a hedge against inflation. As inflation increases, so do property values and rental income, which helps preserve the investment’s purchasing power.
Institutions, including pension funds and sovereign wealth funds, are attracted to BTR’s scalability, which allows them to deploy large amounts of capital into a single asset class. The scale of BTR communities attracts and justifies professional management, which reduces operational risk for institutional investors.
Family offices are patient investors with multi-generational wealth preservation in mind. BTR’s long-term, stable cash flow and appreciation potential align perfectly with this objective. BTR offers a valuable way for family offices to diversify their real estate holdings and reduce their overall investment risk.
Many family offices prefer direct real estate investments, and BTR allows them to partner with developers to build new properties that they can hold for income. RIAs can use BTR to offer their high-net-worth clients access to institutional-quality private real estate assets that were traditionally unavailable. The steady income and lower volatility of BTR compared to more speculative investments make it an attractive option for clients seeking more consistent returns.
CM: What are some of the most common structures or partnerships you’re seeing between developers and capital providers in this space?
TS: The most common structures are joint ventures (JVs), which combine the developer’s expertise with the capital provider’s funding. Within JVs, the specific legal entity and profit-sharing mechanisms vary based on the General Partners experience, project complexity, and risk.
Over the past ten years, the two most common partnership structures would be the GP/LP structure and the Co-GP structure. The GP/LP structure is the most common partnership, especially for larger commercial deals involving institutional investors.
The General Partner (GP) – The developer or “sponsor” who handles the day-to-day operations, including finding the land, securing the construction financing, managing the build process, and executing the overall business plan. GPs also contribute a smaller amount of equity to align their interests with their investment partners. Limited Partner (LP) – The capital provider (private equity funds, family offices, high net worth individuals) who takes a passive role, supplying most of the project’s equity. The LP’s liability is typically limited to their investment.
The JV is most often structured as a limited liability company (LLC) or a limited partnership (LP), with an operating agreement detailing each party’s rights, responsibilities, and profit-sharing.
Perhaps not as popular as the GP/LP structure, the Co-GP model is also common in the marketplace. This model is used when a developer needs help raising the GP’s portion of the equity. Another party acts as a “Co-GP,” or co-general partner, to contribute more capital to the developer’s side of the deal.
CM: Looking ahead, how do you see the BTR market evolving over the next three to five years?
TS: Demand will remain strong due to housing shortages and the evolving needs of today’s discerning residents, and we believe the market will further mature and stabilize after a period of rapid growth. Demand drivers remain extremely strong as the millennial cohort, now in their mid-to-late 30s, is fueling demand for more spacious living as they start families, have children, and get pets. Many are renting by choice to maintain financial flexibility or are unable to purchase a home due to high interest rates and purchase prices.
The BTR sector has significant potential to meet the needs of the “missing middle” renters who desire a suburban living experience with more space than a typical apartment but are priced out of the for-sale market, or do not want to part with savings for a down payment.
The lasting effects of remote and hybrid work models continue to drive a need for more space and migration to suburban and exurban areas, where BTR communities are prevalent. A growing pool of baby boomers and empty nesters are choosing BTR communities for the low-maintenance, single-family lifestyle they provide, often with amenities.
We believe we will see more “attached product” in the market, as construction and land costs remain high. Developers are building higher-density townhomes and attached homes to maintain affordability and preserve project margins. Design choices, like garages and yards, will evolve to appeal to renter preferences.
The recent capital-constrained market has forced less experienced players out of the BTR space, leaving more sophisticated, professional operators to dominate. This consolidation will lead to more efficient management and a higher, more consistent quality of service.
We believe we will continue to see large institutional “scattered site” operators continue to sell these homes and focus on developing or acquiring build-to-rent communities. The institutional owner understands the inefficiencies of managing thousands of “scattered site” single family homes, and the efficiencies that come with BTR communities.