Looking Ahead | 9 min read

Build-to-Rent: What Building Products Manufacturers Need to Know

Posted By
Danielle Fauteaux

Because the Build-to-Rent market is expanding, building materials manufacturers need to stay on their toes to refine their messaging and sales playbooks to cater to these unique buyers.

Why the Rise in Build-to-Rent?

There are a few market forces that are contributing to the rise in new construction starts and renovation project starts by investors for the purpose of passive rental income and expanding investment portfolios.

  1. The housing market appears more stable than the stock market.
  2. First time home-buyer purchases are on the decline
  3. Affordable housing options are in stark need throughout the nation.
  4. Millenials and GenZ demographics, in general, have less desire to own a home and more desire to rent.

These market forces have created the perfect opportunity for investors to focus portfolio diversification by investing in land acquisition, new construction, residential fixer uppers, and commercial building retrofitting.

We talked with Mark Mitchell about this topic around the 27 minute mark.


Build-to-Rent Investor Buyer Persona

They Don't Want Builder-Grade Finishes

For starters, builder-grade finishes are typically less durable than even just sightlier higher quality construction products. Rather than have to account for future repair costs (and hassle factor), the build-to-rent persona is looking for the options that will provide the best long-term value and be easy to maintain.

Since renters are notoriously careless in the spaces they rent, these materials buyers are also interested in timeless features and fixtures that can be replaced as needed or repaired in sections or one at a time only when necessary. As such, they don't typically choose building products that are likely to become obsolete and hard to find replacements for. This allows them to minimize their costs during rental turnover processes.

They Want to Be Ready to Rent ASAP

Time is money and the more time they own the property without tenants, the less value they are yielding from their investment. As such, if your materials are out of stock and on backorder, or if they can't find information about when they can expect you to have available stock directly or through your channel partners, they often won't bat an eyelash to find a comparable supplier. They are looking for a supplier that has the right amount on their timeline.

They Want to Have a Competitive Space to Market

Build-to-rent investors are looking at renter habits and the trends regarding how communal spaces are used, who is renting, and how to increase rental prices at minimum lifetime cost to them. Coach your direct and indirect sales teams how to research, spot need, and speak to these rental market trends such that your brand and product fits into the story.

Some Build-to-Rent Buyers ARE the General Contractor

Because it's getting harder and harder to scrape out even a modest 5-8% profit margin on a new build, construction firms are looking at ways to grow their business's bottom line without losing out to higher costs. Given the rising materials costs, labor shortages and wage increases, and higher construction costs in general, coupled with the rise in market demand for rentals and affordable housing, builders and contractors who have capital saved up are investing in this opportunity.

In their eyes, they can build for themselves cheaper and faster than if they were building for a client AND then on top of that they will be able to count on recurring revenue. Especially for builders and contractors who scraped through the 2007-2008 downturn and are looking at contradicting viewpoints on the state of the the housing market over the next one to three years, having streams passive income is becoming a top priority for construction business owners.


How to Generate Demand from Build-to-Rent Buyers

So what can you do to generate demand for build-to-rent projects in order to sell more of your construction products?

How To Generate Market Demand For Your Construction Products

1. Establish Strategic Partnership in Real Estate Management

Establish partnerships with property management firms. Many investors operate an entire portfolio of rental properties and hire property management companies to deal with the regular upkeep and tenant management responsibilities that investors don't want to worry about. You can generate demand for use of your construction materials when an investor embarks on a build-to-rent.

Establish partnerships with real estate agents in cities ripe for build-to-rent investor dollars. Real estate agents have vast networks of contractors and tradesmen, so if you, the building products manufacturer can develop rapport with top real estate agents and give them reason or incentive to recommend your materials when the conversation arises, you can increase market saturation and increase sales from word-of-mouth and partner marketing tactics.


2. Develop educational content for each type of build-to-rent buyer persona

Generate website content and content for your customer and partner portals about the best markets to purchase land for build-to-rent. Most builders and general contractors know their area well and since they want to manage the project, will often look for build-to-rent opportunities that are local to them. However, investors, often look for local and non-local opportunities.

They will conduct online research to identify other cities that are opportune for their build-to-rent tactic and by ranking for such searches and providing additional helpful information to them via an email gated download, they can opt to gain access to that resource in exchange for enrolling on your email marketing list. From there, you can create segment specific content and continue engaging the build-to-rent audience with information. Then when they are in process on a project, you are likely to be top of mind or at least in the running for specification and the final sale.

Tap into your current customer base as well. General contractors know what they know and they like what they like. Capitalize on this to educate your current customer base about the benefits of build-to-rent projects and how to tie that into their business mix. Then, your repeat customers and loyal buyers who decide to make the move into this market will be likely to place orders from you because they know you, they know how your product works, they know how to install your product, and there will be fewer potential surprises to crop up.

3. Market With and Through Your Distributors

Enable your channel account managers and internal sales reps to generate excitement about this market opportunity within their distributor books of business. Work with distributors to co-develop inbound marketing content or develop the content as a channel marketing team and have your distributors promote the content to their audiences. 

Give your distributors ideas for how to bring up the industry relevant news about build-to-rent in conversations and digital interactions with their customers. Encourage distribution partners to strike up conversations with their books of business about this shift in the market to gather information and spark interest in further investigation. 

Read more on how to sell with and through distributors.


How to Win the Sale

Generating demand for build-to-rent projects is with the intent to close the prospective buyers into actual customers. Once you generate demand, you have to be able to be the best manufacturer to then follow through and supply for the demand.

This requires you to:

  1. Be the most convenient option (at every stage of the channel).
  2. Provide superior customer service at every level.
  3. Communicate order lead times and delivery information.
  4. Be the most durable product, most value-add option for the largest sect of your target buyers.
  5. Provide guarantees and warranties as able. And make sure the guarantees are easy for your customers to keep record of and to find at a later date if necessary.
  6. Not pitch a product; help solve for projects and unique installation challenges.
  7. Train sellers to know which comparable products to recommend in the event a desired product is out of stock.
  8. Be an honest mediator between stakeholders who disagree.

Learn more about managing building products sales across the various stakeholders involved in the purchase decision.