The Upfront Cost Burden in Build-to-Rent

Is Appliance Leasing the Better Path for BTR?

The build-to-rent (BTR) industry is booming across the U.S., offering an attractive investment strategy by delivering purpose-built, single-family and multifamily rental homes to meet surging tenant demand. But while BTR developers and manufacturers have mastered the art of scaling housing construction, many still wrestle with one of the industry’s most persistent financial headaches: the heavy upfront cost of appliances and other fixed assets.

🧱 The Appliance Cost Burden in BTR

Whether you’re outfitting 10 homes or 1,000, the costs of water heaters, refrigerators, dishwashers, washers, dryers, and HVAC units add up—fast. These assets are required upfront, often well before any rent is collected. For BTR manufacturers operating on thin margins and high debt service, this creates a cash flow strain that can choke expansion.

Here’s how it typically works today:

• Water Heaters are purchased upfront during or shortly after vertical construction.
• Developers must capitalize and amortize those costs across a rental period that could stretch 10-15 years.
• If a unit goes unrented or sits idle for months, the cost remains locked in with no return.
• Warranty coverage is limited, repairs fall on the owner, and replacements introduce new, unbudgeted costs.

Even with volume purchasing discounts, the capital outlay per unit can reach $1,000–$3,000+, depending on specifications. Multiply that across a portfolio, and the financial weight becomes daunting.

🔄 A New Model: Water Heater Leasing Direct from the Brand

Now, imagine flipping that model on its head.

Instead of purchasing appliances outright, BTR manufacturers and developers could lease appliances directly from Salt Lake Iron & Steel Ltd. Co. the owner of the Kings Peak brand of one of the world’s most efficient condensing tankless water heaters. Here’s how it works:

✅ Key Features of the Leasing Model:

• No money down: Zero payment required until the appliances are installed and in use by the renter.
• Simple monthly fee: Fixed monthly cost per appliance/unit, making cash flow predictable.
• 10-year Product warranty included: no repair stress.
• On-demand fulfillment: Appliances delivered just in time for move-in, reducing inventory and onsite storage needs.
• Easier cost scaling: Expense tied to occupancy instead of speculation.
• Added benefit of improving water quality with a scale inhibitor system included FREE with each installation + every 6 months free delivery of a replacement cartridge.

This model shifts the burden of asset ownership from the builder to Salt Lake Iron & Steel Ltd. Co., allowing BTR operators to align costs with revenue. It also frees up working capital for land acquisition, construction, and expansion—areas where returns are higher and capital is scarcer.

💡 Why This Makes Sense

• For the BTR Manufacturer/Developer:
  • Improves balance sheet by reducing capitalized assets
  • Lowers up-front cash needs by tens or hundreds of thousands per project
  • Matches cost to actual cash inflow (rent payments)
  • Avoids repair/replacement headaches with long-term warranty baked in

🏗️ The Future of Smarter Asset Use in Build-to-Rent

Build-to-rent is a long-game business, but the front-loaded costs can hurt short-term growth. By shifting from purchase to lease, BTR developers can take a smarter, service-based approach that aligns capital deployment with income generation.

As the industry evolves and competition increases, leaner, smarter financial structures will define the winners. Let us know if appliance leasing could be the next strategic tool in your build-to-rent toolkit—freeing up cash today while protecting quality and operations tomorrow.