Are you interested in how to build to rent?
This is where you build new townhouses, and then lease them out to tenants once they are complete.
In this helpful article, we will share nine tips for building townhouses for the rental market.
So, if you’re interested in learning more about this approach to property investing, continue reading.
We’ll leave no stone unturned as we share these tips, so pay careful attention.
Finally, before we get stuck into it. If you aren’t already familiar with the process of building a house the be sure to learn as much as you can.
I digress …
What is Build to Rent?
The sales usually occur off the plan, but some people will also run a traditional sales campaign to sell.
The critical difference between build to rent is that you are building rental properties, brand new.
This means that once complete, you’ll advertise them on the rental market for tenants to live in.
Why Build to Rent Australia
There are several reasons why a real estate property developer might build to rent in Australia.
With this approach, you retain ownership of the properties but benefit from the passive rental income.
Passive income is a great way to build your wealth because you can dedicate your days to your job. You get your salary paid from your job while your rental properties work to generate passive income.
Many wealth creation strategies look to generate sources of passive income. For some, it’s shares and the dividends that come from them. For others, it’s day trading on the stock market.
Owning rental properties has long been a proven method of generating passive income.
Furthermore, once you own property, it tends to appreciate in value. Mainly if you develop in a suburb that booms a few years later.
This means that as well as generating passive income, you are growing your personal equity.
You could even sell off the properties for substantial profit years down the track. Some people do this when moving into retirement to set themselves up to live comfortably in their later years.
If you have multiple investment properties, that’s multiple depreciation schedules.
To be successful in this approach, you need to develop the properties, hold them and rent them out. Patience is the key here.
The long game will pay off, and handsomely.
Tips for Build to Rent
Now we’re going to detail some tips and tricks for the build.
These are cost-efficient approaches to building an investment property that will see it hold its value and reduce the need for expensive repairs.
If you’re taking the above approach of holding the property and selling it down the line, you want to read this section carefully.
These tips will ensure the property is low maintenance and won’t require major renovations when you do come to sell it years later.
Your choice of flooring is crucial. Engineered floorboards are popular, but you want to avoid them.
This is because they are prone to dents and marks, which means replacing the floor when it comes time to sell.
The same applies to other types of floating floors, such as laminate or vinyl.
Consider a solid timber floor, such as Tasmanian Oak. This timber tends to be affordable compared to other hardwoods.
The benefit is that in five to ten years, you can send it back, refinish it, and it will look as good as new.
Townhouses, by design, are double storey. Sometimes triple. This means that your property will have stairs.
Again, hardwood timber is an excellent option for your stairs. It is lovely looking, as well as durable.
Carpet, for instance, will wear, tear, trip and stain. Also, it can become musty and smelly over time.
You might even consider an expensive option for your stairs, such as Victorian Ash, and then opt for the Tasmanian Oak on your stairs.
Remember, you can stain any timber to match another, so you’re not locked into specific hardwood choices here.
More Flooring Hints
When it comes to carpets, you want to be careful not to spend too much here.
If you plan on holding the homes for 5 to 10 years, it doesn’t matter what you do. When it comes time to sell the property, you will likely be replacing that carpet.
An Approach for Benchtops
Furthermore, let’s discuss benchtops for the kitchen and the bathroom.
Stone is the best choice here. This is because they will present well and look sharp without blowing the budget.
They tend to last longer than laminate or similar materials. Again, this means you won’t need to replace or refinish them when it comes time to sell.
Let’s Talk Cabinets
In addition to the benchtop, let’s discuss cabinetry for build to rent. Here we look to use a laminate which is pretty standard for most builds. However, it still looks appealing and presents well.
Tiles for the Bathroom and Laundry
Your choice of tiling is important when it comes to build to rent.
Some lovely tiles are available at solid prices.
The trick here is to be smart about where you lay them. For instance, you might have a two-colour scheme – grey on the floor and wall and the other wall white.
Even though plain tiles might be cheap, they are not popular with tenants or buyers. People like a nice bathroom, so give them one.
This will hold your rental yields at a reasonable level and increase the sale price down the road.
Build to Rent – Other Bathroom Tips
Avoid a floating vanity. Instead, have a kickboard – or kicker. Set the kicker in, and then tile it. This will help create the illusion that the vanity is floating or hanging there.
Why, you ask? A floating vanity might wind up on the floor after 5-10 years. With the kicker set in and tiled, it is secure and still presents well.
The cost for the builders shouldn’t be that much.
It’s tips and tricks like this that make a property stand out in a crowded market. The great thing is they don’t cost the world and will save you money in the future.
Now let’s talk about bathroom finishes. Avoid chrome, even though it is popular. Chrome scratches and cracks sometimes, and once it loses its protective coating, it loses its protective quality.
This means it may rust or corrode. Then, you guessed it; you need to replace it when you sell.
Choose a metal finish such as brushed nickel or brass, which are more durable.
Again, you’ll spend more but save down the road. Let’s continue to learn some build to rent tips.
The Alfresco or Outdoor Area
Go for concrete or paving instead of timber decking. Timber will need oiling every year. Otherwise, it will need to get replaced when it comes time to sell.
It’s easy to forget to oil the timber each year, especially if you have multiple investment properties. Concrete or paving stones will last longer.
Your alfresco should be concrete instead of decking, which needs to be oiled every year, or you may be looking to rip it out.
Getting Ready to Sell
If you follow these tips, when it comes time to sell, the most you’ll have to do is give the inside a fresh coat of paint and maybe repair a little bit of wear and tear.
Furthermore, the materials we’ve suggested in this article will all stand the test of time.
Conclusions for Build to Rent
In this article, we’ve discussed build to rent – and why it is a viable option for generating passive income.
We’ve also shared nine tips for building your townhouse for the rental market.
These tips aim to save you time, money and a headache when you come to sell the properties finally.
On a side note, becoming a local real estate expert would be invaluable over your development journey so any opportunity to learn you should jump on.
If you are considering undertaking a dual occupancy, duplex or any other kind of property development project and you need some help don’t hesitate to reach out to our team of experts here at Little Fish.
We would love to hear from you 1300 799 277.