As federal interest rates continue to climb nationally, at least 10 projects specializing in single-family homes for rent are being developed in McKinney.

Sometimes called build-to-rent, or single-family rentals, houses built for the purpose of renting can already be found in McKinney, most prominently in Avilla Northside at the northeast corner of Community and White avenues, and Elevate at Skyline at US 380 and Skyline Drive.

But more single-family rentals are on the way. In recent months, several projects have received the necessary zoning from McKinney City Council to develop, and a few more with zoning already in place are laying groundwork for more of these single-family rental communities. The upcoming developments include single-family detached houses, townhomes and duplexes.

“We’ve definitely seen a big uptick in this type of development over the last year or two,” McKinney Director of Planning Jennifer Arnold said.

The city estimates it will add about 500-1,000 of these housing units in the next three to five years, she said.

Phil Crone, executive officer with the Dallas Builders Association, said there are about 4,200 of these types of homes in the area, which makes up about 5%-7% of the market, he said.

“It has been increasing, especially in light of the challenges that housing has seen overall,” Crone said.

How it works

While these communities are often referred to by their developers as single-family homes, the city of McKinney’s planning staff notes that these are multifamily developments, Arnold said. The city refers to these as “cottage multifamily” projects.

Among the projects is Legacy at McKinney, developed by Hanson Capital Group at the southeast corner of Rockhill Road and North Brook Drive. Additionally, two more projects are coming to the Painted Tree master-planned development at US 380 and Lake Forest Drive. These are Avendale and Cyrene at Painted Tree.

San Antonio-based AHV Communities also announced a 157-unit rental home community project in July that will come to Custer Road and US 380.

Hanson Capital Group Principal Chris Hanson said these types of projects offer better amenities than most apartment complexes. Any repairs or improvements that need to be made are taken care of by the management company, including lawn care, similar to apartment homes, he said. In addition, these developments offer on-site amenities, such as community centers, pools, fitness centers and trails.

“If you’re renting an apartment, you could also look at renting one of our units,” he said. “But it comes at a price. These units are going to be more expensive than a conventional higher-density apartment community, but not as much as you might think.”

Hanson Capital Group’s Avilla Northside community had floor plans available as of July 8 ranging from $1,721-$2,951, according to its website.

Tom Woliver, co-president and founder of Oxland Group, the firm behind Painted Tree, said these developments will attract a variety of residents as more people choose to be renters.

“It’s hard to find a home, and [rentals are] just a great way to get into a community like McKinney and figure out if this is the right fit,” he said.

Choosing McKinney

With his two projects in McKinney, Hanson said the city offered a prime location close to the Dallas area that still had land available to develop.

“We wanted something that had some conventional apartments in the marketplace, which we think we’ll draw a lot of tenants from, as well as predominantly single-family communities,” he said. “And we wanted it to be in an area that was continuing to develop.”

Woliver added that these types of communities provide a more attainable housing option than purchasing a traditional single-family home.

“It’s more affordable to rent than own because of interest rates and the cost of housing,” Woliver said.

The city of McKinney has made affordable housing options a priority in the city as home values and rents rise. The median sales price of a home in McKinney has increased nearly 77% in the last five years, per data from the Collin County Association of Realtors. Rents for McKinney apartments have increased more than 20% over the last year, according to Apartment List.

While single-family rentals cost more in monthly rental costs than traditional affordable housing units, this does add an option to help fill in the “missing middle,” Arnold said. Missing-middle housing offers between two and eight units, typically in the form of duplexes, triplexes, fourplexes or townhomes. This is a housing type the McKinney Council is focused on as it prioritizes housing attainability and affordability, Arnold said.

City Council Member Patrick Cloutier has voted to approve two single-family rental community projects since he was elected in January. Both projects were unanimously approved by council members.

One project he voted for was in April, which was a development for duplexes for rent by Craig International at Stacy and Custer roads. These duplexes could eventually transition into products for sale rather than for rent, he said. The second project he voted for was Avanterra Lake Forest in late June, consisting of 123 duplex units at the future Collin McKinney Parkway extension and Lake Forest Drive.

Cloutier said if more of these projects come to council he would like to see an option for people to purchase them and build equity, like the Craig International project.

McKinney resident Lisa Turner said rental communities like Avanterra Lake Forest create problems precisely because they don’t allow the resident to build equity.

“All of that [money] is going to go out of state, and the rent will be so high that [the renter] will never be able to save and own a home of their own,” she said.

However, Jennifer Glaze, another McKinney resident, said a rental home community could be a good option for her. With two HOA fees on her aging home, she said she wants to be able to get more for her money.

“I’m in my 50s, and I don’t want to have to do landscaping,” she said. “It looks like they had some really good amenities.”

Developers predicted that more cottage multifamily projects will be built, not just in McKinney, but throughout the region.

“The reality is I think this is something long-term that’s going to be around probably for the foreseeable future,” Woliver said.