Q1 2026 Investment Insight: Build for Rent’s Acceleration (part 1)
What is Build for Rent (BFR), and what does the rapidly growing renter demand for this asset class mean for investors?
This Q1 2026 investment insight video – a behind-the-scenes discussion between Capital Square’s executive vice president of acquisitions, Jorge Figueiredo, and Capital Square’s vice president of acquisitions, Bennie Su – explores these questions and so much more.
Key Moments:
- What is Build for Rent (BFR)? (0:00)
- What is the origin of Build for Rent as an asset class? (jump to 0:54)
- What is the cost to own versus the cost to rent right now? (jump to 2:38)
- What kind of renter is interested in Build to Rent? (jump to 4:46)
- How does Build for Rent fit into Capital Square’s investment thesis? (jump to 5:57)
- How has Build for Rent performed as an asset class relative to other property types that Capital Square manages? (jump to 7:04)
Approximate Transcript:
Jorge Figueiredo: So, at Capital Square, we’re firm believers in what we call “BFR,” or “Build for Rent” – some people call it “Build to Rent” – but this is a very specific asset class that we’ve added to our offerings in our portfolio. What is Built for Rent? What is BFR?
Bennie Su: It’s a good question. Built for Rent is an emerging asset class. It started really around 10 years ago, and very simply put, it’s a community of single-family homes that are purposely built for rent. It actually serves as one of the many solutions to the housing crisis that the U.S. faces today.
Jorge Figueiredo: Now, that’s a good description, but how did we get here? Why does BFR exist?
Bennie Su: You probably have seen it in the news. The U.S. has housing shortage of 3 to 5 million homes when you compare the number of available homes out there relative to the number of households in the U.S. This really stemmed from the Great Financial Crisis over 15 years ago. A lot of the developers and investors were really scarred by U.S. housing as it was an eye of the storm of the Great Financial Crisis.
When you look at the starts, before the Crisis, it was around 1.5 million homes being built per year, and after, it’s a really stark drop – around 50% each year – to around 700,000 homes built each year. So, when you’re under-building every single year over a 15-year period, that problem really compounds on itself.
Today, we’re building a lot of homes in the U.S. through a lot of really great public builders, private builders, too. But at the same time, we’re also losing homes. There’s a lot of aged inventory that’s neglected, not being maintained, and those are being demolished. So, for the last 10 years, we’ve actually lost a million homes. So, there’s really a big challenge, from a supply perspective.
And from the demand perspective, the U.S. has been a great beneficiary of population growth from an organic perspective – converts and household formation and in-migration. When you juxtapose very strong demand with not a lot of supply, you have a big supply demand gap. That’s why you see home prices at record highs.
The average price to buy a home right now is half a million dollars. I can’t really believe that. But not only is it half a million dollars to buy the house, as a homeowner, you have to maintain the house, and the cost of maintaining the house is extremely high too. As home values go up, so do your property taxes, insurance, and you’re the expert on that. We can talk about that. [Insurance has] gone up because of the aftermath of the tragedies from the storms that we’ve seen across the U.S. – in Florida, Texas and the Carolinas. Mortgage interest rates are extremely high too. Thirty-year fixed is anywhere from 6 to 7% right now. And the cost to just maintain a house – the cost of labor and the materials – are all really expensive. It’s just expensive to buy a house, so Build for Rent is a solution to address that, because right now, the cost to own is so much higher than the cost to rent.
Whenever we purchase or develop here at Capital Square, we take a look at that cost-to-own versus cost-to-rent analysis. From what we’ve seen over the last few years, every single month, it costs $700 or $1,000 more a month to own versus rent. This math is what drives a lot of demand into this emerging asset class.
Jorge Figueiredo: And that’s not really the historic norm. Over the last 30 years or more, that delta between owning versus renting just hasn’t been that significant. It typically is more expensive to own versus to rent, but I think as we look at today – $700 to $1,000 dollars more expensive to own versus rent in most markets where we operate – that is a real departure from the historical norm.
Bennie Su: That departure is around four times the average historically, so it’s definitely very stark. It’s a huge dollar amount in everyday Americans’ pockets. Build for Rent serves to solve that problem.
Jorge Figueiredo: Sounds like this asset class serves as a solution to a lot of that demographic looking for BFR properties to live in or would-be first-time home buyers, right? People who are looking to form a household – they might be young professionals with a job, perhaps a kid or kid on the way; they’re looking for more space; they’re looking for a yard; they’re looking for a different style of living. BFR just gives them a better solution.
What I think, in turn, is one of the big pros of this asset class is that it often has a really quality tenant. It’s not a transient, super young professional. It’s someone who’s a little more established, looking to rent for a little longer, probably looking for good schools, which helps us define our target markets a little better. That creates a more stable asset with less turnover, better quality tenants, and a lot less bad debt in relation to conventional multifamily.
One of the many reasons why we like this asset class is its strong tenant base and the strong operations that it comes with – it’s even beyond the strong supply and demand story – but from an investment thesis standpoint, how has that translated for us?
Here we are. The story is starting to prove itself. So, what have we done here at Capital Square that shows that we’re paying attention?
Bennie Su: We’ve been really excited to launch the Build for Rent platform. It’s been three years since we’ve launched, and since then, we’ve been very busy. So far, we’ve closed over half a billion dollars of acquisitions and development all across the U.S. We’ve done almost a dozen transactions across stabilized acquisitions and forward acquisitions – which are when you’re buying empty homes from a home builder, and you’re taking up the lease-up risk – and we’re doing ground up development too. You know, over the last three years, we’ve been able to do a lot of transactions across the country.
How have you seen Build for Rent perform as an asset class relative to the myriad of property types that Capital Square manages?
Jorge Figueiredo: Yeah, sure. So strong performance overall. Obviously, over the last three years, any real estate operator that hasn’t had challenges is probably lying to themselves or someone else. There are specific markets where supply and demand has been a little bit off balance and occupancy. We’ve started to see a lot more concessions. But in relation to conventional multifamily, we feel still really strongly about performance in the BFR space.
The specific type of demographic in BFR is less susceptible to downturns, and they’re there for the longer term, which translates to stronger occupancies in a lot of the markets that we’re in. While we’ve seen increases in insurance and maintenance costs and things like that that you’ve alluded to, that has actually helped strengthen our ability to lease, because that continues to push people away from owning a home – and a lot of times we’re seeing renters by choice.
So those operational differences – while some can be a little subtle, some a little more pronounced – I really think they speak in favor of, again, a more stable asset class that is there for the long haul, and residents are looking for longer term solutions.
Bennie Su: Build for Rent, as we’ve mentioned, is a very nascent asset class. There’s only 350,000 units so far in the U.S. When you compare that to multifamily, with 24 million units, it’s less than 2%, right? And so, it’s very new.
In terms of the market concentrations of where it is, of that 350,000, a quarter of it sits within Phoenix, the birthplace of Built for Rent, and in Atlanta. Then the other quarter of it is focused in markets that are very business friendly, low cost of living, and very high quality of life – states like Texas, the Carolinas. When you think of cities – like Houston, Dallas, Austin, Raleigh and Charlotte – these are really focal points for Build for Rent as an asset class. We really spend time investing and putting capital to work there.
Jorge Figueiredo: Yes, and [these locations are] well aligned with our macro strategies of where to buy real estate, back to the supply and demand dynamics that drive our thesis, typically. Those markets are markets that we feel strongly about, where demand is outpacing supply and warmer climates, less regulation. For all those reasons, there are geographies that we target, so well aligned there.
[Continue watching part 2 of this conversation.]
Is your portfolio built for the renter of the future?
At Capital Square, we believe the Build for Rent asset class is positioned for growth. Discover how our open BFR offerings might fit your 2026 goals. Contact our team today.
Disclosure: Securities offered through WealthForge Securities, LLC, Member FINRA/SIPC. Capital Square and WealthForge Securities, LLC are separate entities. There are material risks associated with investing in DST properties and real estate securities including illiquidity, tenant vacancies, general market conditions and competition, lack of operating history, interest rate risks, the risk of new supply coming to market and softening rental rates, general risks of owning/operating commercial and multifamily properties, short-term leases associated with multifamily properties, financing risks, potential adverse tax consequences, general economic risks, development risks, long hold periods, and potential loss of the entire investment principal. Past performance is not a guarantee of future results. Potential cash flow, returns and appreciation are not guaranteed. IRC Section 1031 is a complex tax concept; consult your legal or tax professional regarding the specifics of your particular situation. This is not a solicitation or an offer to see any securities. Please read the Private Placement Memorandum (PPM) in its entirety, paying careful attention to the risk section prior to investing. Diversification does not guarantee profits or protect against losses. Private placements are speculative and illiquid.
