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Underwriting a build-to-rent property is not much different than underwriting an apartment asset. Many of the costs, expenses and vacancy trends are similar—but there are a handful of disparities. Walker Dunlop’s Andrew Dalgliesh highlighted some of the key differences in build-to-rent underwriting in the Beyond the Basics for Build-to-Rent webinar.

Turnover is the most notable difference in underwriting of the two assets. While BTR properties have lower turnover rates, the larger size of the property often drives up the price to turn the unit. The higher cost is actually enough to offset the gains in occupancy. “Turnover is an interesting expense. The turnover ratios tend to be significantly lower than that of apartments, but the turnover costs tend to be higher because the larger unit common areas lead to greater expense for painting and floor replacement,” said Dalgliesh in the webinar. “The increased turnover expense actually offsets some of the increased savings that you would expect from the lower turnover rates.”

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Kelsi Maree Borland

Kelsi Maree Borland is a freelance journalist and magazine writer based in Los Angeles, California. For more than 5 years, she has extensively reported on the commercial real estate industry, covering major deals across all commercial asset classes, investment strategy and capital markets trends, market commentary, economic trends and new technologies disrupting and revolutionizing the industry. Her work appears daily on GlobeSt.com and regularly in Real Estate Forum Magazine. As a magazine writer, she covers lifestyle and travel trends. Her work has appeared in Angeleno, Los Angeles Magazine, Travel and Leisure and more.

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