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'Build to rent' homes becoming more popular than ever

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Posted at 5:30 AM, Mar 15, 2023

PHOENIX — Homes built exclusively for renters are becoming more popular than ever. As more people move to our state, more "build to rent" communities are sprouting up across the nation.

These mostly upscale communities rent like an apartment would with no shared walls or neighbors living above or below.

The concept started in Arizona, almost by accident when the real estate bubble burst.

In 2008, a group of entrepreneurs built some single-family rentals in Tucson. They figured these properties would attract renters with bad credit. Instead, they found people with good credit choosing to rent.

In 2012, the group formed NexMetro.

Now, this Valley-based builder is focused on single-family rental communities with projects in Arizona, Colorado, Texas, and Florida.

ABC15 talked with Jacque Petroulakis, the executive vice president of marketing and investor relations.

"This single-family long-term rental choice is for those who may not want the responsibility of owning a home but still need more space than what an apartment affords."

Calling these luxury leased-home neighborhoods a unique housing shortage solution, Petroulakis says, "I think that it helps with affordability issues, demand issues and definitely feeds the supply."

"The idea is for people who really love the lifestyle of a home, but don't want a mortgage or to be tied down to a certain location," she said. "These properties are for people who don't want to deal with maintenance headaches."

Many "build to rent" communities offer high-end appliances and private backyards which is a real selling point for Avilla Properties in Arizona.

That's exactly why Jim Garbarczyk signed his 12-month lease at Avilla Enclave in Mesa.

"My dog loves running around in the backyard, plus we live steps away from the dog park right here in the neighborhood."

Garbarczyk decided to put his Gilbert home on the market last summer.

It sold much faster than he expected, telling ABC15 that apartment living while he searches to buy another home simply isn't an option.

"The first thing I thought was, 'there's no way I'm gonna afford it,' and then when we went over the rent and everything like that and I'm like, wow, it compared to what you would be paying for an apartment."

For investors, the "build to rent" concept does come with key challenges especially when it comes to maintenance. Because effective building management is key to protecting the long-term value of a development, NexMetro says proper and prompt maintenance is something their property managers are committed to.

"These homes are for those who rent by choice, primarily millennial professionals, people whom I call midlife transition couples just starting to have a family or a single person who maybe has just been divorced," said Petroulakis. "Maybe they've lived in a single-family home for the past 10 years and in no way do they want to live in an apartment now."

With the housing shortages we've seen in Arizona, climbing interest rates, and sky-high prices for homes, "build to rent" communities can provide an alternative for millennials and baby boomers who don't want to deal with the maintenance headaches that can come with owning a home.