By Caitlin Sugrue Walter, PhD., SVP and Head of Research and Innovation
Caitlin Sugrue Walter, Ph.D., is SVP and Head of Research and Innovation, with primary responsibility for overseeing NMHC's research efforts.
The last-minute introduction of a provision to the 21st Century ROAD to Housing Act placed build-to-rent (BTR) housing in the same category as single-family rental housing, effectively grouping purpose-built rental communities with other forms of single-family rental ownership. BTR communities are professionally managed “horizontal apartments” that provide homes to young families, seniors, military families and others seeking an alternative to traditional multifamily rentals but are often confused with scattered-site single-family rentals.
This disconnect has contributed to many misconceptions about how these communities are developed, financed and operated. The following highlights several frequently cited myths about BTR housing and contrasts them with the facts.
| Myth: Disposing or selling individual homes in a BTR community at the end of seven years is easily accomplished, just like the sale of a single-family home. |
FACT: This is far from the truth since BTR communities are built, structured and financed just like apartments. Without the BTR financing structure, these homes would likely never be built at all. Therefore, it is unrealistic to assume that the homes could simply be sold off individually. Even if these homes were built, selling them to individual homebuyers would be very complicated and costly. In many cases, it would involve legal conversion of the properties into saleable lots, the creation of homeownership associations, provisions for maintaining infrastructure and community facilities—not to mention, effectively evicting existing residents if they cannot afford to purchase the home.
| Myth: Only private equity owns build-to-rent communities. |
FACT: A variety of ownership models exist for BTR communities. A 2023 analysis by the Urban Institute details various models, including partnerships between private developers and their investors, which include pension funds, retirement accounts, mutual funds, insurance companies and real estate investment trusts (REITS). Many of these are comprised of individual shareholders who purchase publicly traded shares in these companies or otherwise. These investments help provide retirement security for retirees, middle-class Americans and others while at the same time helping to build much-needed housing.
| Myth: All single-family rentals are the same. |
FACT: BTR communities and scattered-site single-family rentals are fundamentally different housing models. While they both have the same tenure type (rentals) and physical structure (one unit, detached or attached), the similarities end there. Scattered-site rentals typically consist of individual homes acquired across existing neighborhoods and managed as part of a dispersed portfolio. According to the Urban Institute, scattered-site rentals are more likely to be older, have fewer neighborhood amenities and require greater capital expenditures than units that comprise BTR communities.
BTR communities, by contrast, are purpose-built rental developments planned, financed, designed and constructed specifically for long-term rental living. Like traditional apartment communities, they are developed as a single project, professionally managed, and often include shared amenities, centralized maintenance and on-site or dedicated management. While both housing types involve single-family-style homes, BTR communities function operationally and developmentally much more like multifamily housing than scattered-site rentals.
| Myth: Build-to-rent communities take homeownership opportunities away from folks who would purchase. |
FACT: BTR communities may look structurally the same as single-family houses for sale, but they are not designed or intended for individual sale. Oftentimes, they are planned, developed and financed as a single project--using large pieces of land that have common infrastructure and community facilities, making it difficult or cost prohibitive to sell individually.
They are not designed as homes that would be bought by a family—they are purpose-built as rentals, thus banning BTR homes or restricting the length of the rental period would not necessarily mean that they would be built as for-sale single-family housing, as many assume. An analysis by the National Association of Home Builders notes tangible differences between for-sale single-family homes and BTR homes, including lot sizes, number of bedrooms and amenities.
BTR residents do not always seek homeownership. One survey by John Burns Research & Consulting, a research firm specializing in BTR communities, found that 36% of BTR residents preferred renting their home than buying, and 47% of respondents earned $100,000 or greater per year—suggesting that while affordability is a concern for some residents, many simply prefer the lifestyle that BTR offers without the financial commitment, maintenance responsibility, tax and insurance costs of being a homeowner.
| Myth: Build-to-rent is a small segment of the market, and the proposed legislation would not have a meaningful impact on the housing supply. |
FACT: BTR is still a relatively new phenomenon; however, its significance has grown.
John Burns Research & Consulting now tracks 500,000 BTR units in its database. New BTR communities are continuing to be built, in an environment where it is financially difficult to make other types of multifamily feasible. Pew estimates that “approximately 70,000 to 130,000 BTR homes have been built annually in the last several years”. Given the current rate of production under the existing financing structure, there is potential for BTR communities to provide more than a million new housing opportunities nationwide in the coming decade.
| Myth: BTR only encompasses market-rate housing, so those most in need of housing won’t be impacted. |
FACT: While the growth in popularity of the BTR segment has grown recently, other types of BTR have existed for decades and represent important segments of the rental market. Though the proposed provision does note some exceptions, the below segments would likely be negatively impacted, depending on interpretation of any exceptions:
- Military housing: A 2023 Congressional report found that 58% of servicemembers live off-base, and many military communities face critical housing shortages. A large share of the existing off-base housing units is in communities comprised of single-family structures, which gives them the benefits of single-family living without the financial risk involved with a highly transitory career path.
- Low-Income Housing Tax Credit (LIHTC) and affordable housing properties: The emergence of the BTR segment has led HUD and the GSEs to explore financing opportunities that would broaden affordable financing eligibility, but BTR properties are now eligible for LIHTC funding, and many housing providers have begun to utilize the funding for BTR developments.
- Senior housing: Age-restricted communities that are purpose-built single-family rental would fall under this category. A National Association of Homebuilders analysis shows that new BTR communities are more likely to be age-restricted communities than newly built for-sale single-family housing. As the Baby Boomers are now firmly in this age demographic, any restriction would present a constraint on the ability to meet the needs of seniors looking for a consistent housing payment and fewer maintenance responsibilities.
- Student housing: Purpose-built student housing serves an important part of housing for universities that are unable to house all their students. Many of these housing units are in “cottage-style” communities, which would fall under the classification of BTR in the proposed legislation. Even with the construction of purpose-built student housing, affordability concerns for college students remain front and center, and any disincentivizing of building could worsen affordability.
| Myth: The 350-unit limit would not apply to many housing providers. |
This legislation could impact hundreds of households and the families that reside there. In practice, the 350-unit threshold could apply to a significant share of BTR communities. Many BTR developers and operators often develop or operate multiple communities across markets, and their total portfolios can easily exceed 350 homes, even when individual communities are relatively modest in size. Gaining scale in the BTR market enables housing providers to enhance maintenance and other services and keep costs more affordable as they are spread over more homes. Yardi Matrix estimates that 47,000 BTR units were completed in 2025 in BTR communities of 50 units or more. If one firm owned seven of these BTR communities, for example, they would exceed that cap.