While Institutional Home Buying Slows, This Fund Has Acquired 15 Entire Rental Communities So Far In 2022

Institutional investors went on a home-buying spree last year accounting for an estimated 13% of all home sales. The binge continued into the first half of 2022, but some of the big spenders have begun pulling back. 

Blackstone Inc.’s BX Home Partners of America announced in August that it would stop buying homes in 38 U.S. cities. Invitation Homes Inc.’s INVH acquisitions slowed down from 1,543 homes in the Q4 of 2021 to 559 homes in Q3 of 2022.

One fund, however, is staying committed to its thesis that the single-family rental market remains strong. The Flagship Real Estate Fund, which is one of several real estate funds sponsored by Fundrise, has acquired 15 rental home communities in 2022 alone. 

The fund recently announced its latest acquisition, a rental community near Atlanta, Georgia, comprised of 11 homes. Other acquisitions this year include a rental community in Panama City, Florida, with 233 homes, a community in North Las Vegas, Nevada, with 185 homes, one in Dallas, Texas, with 163 homes and 10 to 150 more homes of varying sizes and values.

The fund has now completed 51 single-family rental acquisitions since its inception in January 2021, plus 11 multifamily properties and six industrial properties. 

One of the major differences between the Flagship Real Estate Fund and other institutional investors is that it’s mainly funded by retail investors, not pension funds and private equity firms. 

The Flagship Real Estate Fund has a minimum investment of just $10 – less than a single share of Invitation Homes and with far better performance this year. The fund has produced total returns of 5.5% year-to-date after delivering 29.3% in 2021. 

In its Q3 2022 letter to investors, Fundrise stated, “Rental housing, which makes up the foundation of the portfolio, is a basic necessity. Meaning that even as everything gets more expensive and people start cutting back spending on nonessential comforts like new cars, entertainment, eating out, vacations, or NFTs of random cartoon animals, they will continue to spend a reliable percentage of their income on food and shelter. In fact, as we’ve cited many times before, rent is one of the costs that has historically kept pace with inflation, making rental housing one of the few investment assets potentially able to hold its value during periods like this one.”

Related: This Little-Known REIT Is Producing Double-Digit Returns In A Bear Market: How?