As the cost of homeownership continues to climb, would-be homeowners are looking to rent their dream homes instead of buying them. Enter the build-to-rent (BTR) home. BTR communities look like traditional single-family subdivisions, but they’re designed and built solely for renters.

According to the rental information network Rent Cafe, the BTR market has been on an upward trajectory year over year. In 2021, there were 10,000 BTR homes in the U.S. That number jumped to 15,700 in 2022. And in 2023, there were 27,500 BTR homes completed nationwide, with 45,000 more under construction in 2024.

Whether a luxury townhome or a simple single-family ranch with a yard, BTR homes might soon replace starter homes.

Why BTR homes are appealing

BTRs allow many people to get a family home sooner. Some renters choose a BTR home for the flexibility. Others choose a BTR to avoid the high cost of ownership, but without sacrificing the space or luxury of a new home they might not be able to afford otherwise. Many BTR communities offer maintenance-free living, with luxury amenities like pools, saunas, clubhouses and greenspace.

Over 50% of BTR communities are in major metro areas. Here are the top five cities for BTR single-family construction in 2023, according to Rent Cafe:

1. Phoenix, Arizona, 4,030 new homes. This represents 164% growth over 2022 and a 10-year high.
2. Dallas, Texas, 2,694 new homes (a slight decrease compared to 2022).
3. Atlanta, Georgia, 1,981 new homes, a 10-year high.
4. Austin, Texas, 840 new homes.
5. Charlotte, North Carolina, 714 new homes.

Additionally, these cities built between 500 and 699 BTR homes in 2023, a 10-year high for most:

• Myrtle Beach, South Carolina (651)
• Kansas City, Missouri (636)
• Columbus, Ohio (625)
• San Antonio, Texas (587)
• Nashville, Tennessee (537)
• Jacksonville, Florida (530)
• Greenville, South Carolina (529)

Even though BTR communities offer the feeling of a home without the cost of homeownership, you’ll still need to protect yourself and your things. The landowner or building community’s insurance won’t cover your personal liability or possessions.

The importance of renters insurance

Renters insurance is property insurance for your belongings. It also covers you if someone is injured on your property or sues you for defamation. Since renters insurance doesn’t cover the home you live in (because you don't own it), it’s cheaper than a traditional homeowners policy.

Here are the main types of coverage included in a renters policy:

Personal property pays to repair or replace your belongings if they are damaged, destroyed or stolen. It covers things like clothing, furniture, electronics and jewelry.

It also covers things you take with you when you travel, and things you keep in your storage locker or car. If your belongings are stolen from your car, your renters policy will cover them.

Liability covers your legal defense and court judgments if someone sues you for property damage or injury. In some states, people can sue for current and future earnings as well as your assets. You might think you own nothing, but you’d be surprised how a court battle can heat up when money is involved. Liability only covers you up to your policy limit, regardless of whether the court case is settled. Make sure your limit is high enough to cover your risks.

A personal umbrella can extend and increase your liability limits across your home and auto policies. You can buy it as a separate policy, and it’s available for homeowners and renters.

Medical payments to others cover guests who are injured on your property. Increasing this coverage can help you avoid a lawsuit.

Increasing your renters policy coverage

You can add coverage or increase your basic policy limits by adding things like:

• Additional living expenses (ALE) for when you have to live in a hotel temporarily after a covered event, like a fire.
• Coverage for outdoor buildings, landscaping, or riding lawnmowers when you’re responsible for your outdoor maintenance and upkeep.
• Riders or scheduled property to increase your coverage for valuable items like electronics, jewelry, furs, bicycles, cameras, musical instruments, firearms or collections. These items have smaller limits of coverage called “sublimits.” People are often surprised to discover that a standard renters policy only offers up to $1,500 in coverage for all the jewelry or instruments they own. But you can add coverage using a rider.
• Floods, earthquakes and sewer backups aren’t covered by standard renters policies. You won’t be protected if your stuff gets damaged by one of these events. The good news is these policies are inexpensive compared to a homeowners policy because you’re not covering your dwelling, just your things.

Call the Rathbun Insurance team

BTR homes can be an affordable solution for housing shortages, family starter homes and people looking to size up without the long-term financial risk of owning.

If you’re considering a BTR home, renters insurance can help protect your belongings and shield you from potential liability. Even if your BTR home doesn’t require renters insurance, invest in it anyway. It’s a low-cost policy that provides high-return protection.