Can't Beat 'Em? Retail Investors Now Backing Institutions Competing For Control Of The Single-Family Rental Market

For years, single-family rentals have been a wise investment decision. Individual investors have been purchasing this type of asset for decades, accounting for the majority of single-family rental transactions.

However, trends have shifted over the past decade with institutional investors now capturing a larger share of the market and making it difficult for individuals to compete for the limited number of residential investment properties available. 

Being priced out of the market, many retail investors are now investing alongside these institutional funds instead of trying to compete.

Which institutions are taking over the single-family rental space?

Invitation Homes INVH

Founded in 2012 in the aftermath of the economic collapse of 2008, Invitation Homes had the intention of buying inexpensive homes to rent out. Its founder, Dallas Tanner, used capital from the real estate investment trust within Blackstone Inc BX to start the business.

It is currently the largest landlord of single-family rentals in the U.S. with roughly 83,000 single-family homes.

Flagship Real Estate Fund

The Goldman Sachs GS backed fund, sponsored by Fundrise, has quietly amassed a significant portfolio of rental properties since its inception in early 2021. Its holdings now consist of entire communities of single-family rentals, mostly concentrated in the Sunbelt region. 

The Flagship Real Estate Fund is Fundrise's most popular offering and has already produced total returns of 35% for its investors. 

Arrived Homes

Arrived Homes isn't actually an institutional investor, but a real estate crowdfunding platform that enables investors to purchase shares of rental properties. With funding from Amazon.com Inc. AMZN founder Jeff Bezos, the company launched in 2021 and quickly established a reputation as a serious, emerging investment company in the single-family rental space.

Individual investors have already funded nearly 200 properties worth approximately $70 million.

Read also: 'Housing Is The Canary In The Coal Mine' Hey Jerome Powell, Are You Listening?

Other names to watch?

Other well-known players include Tricon Residential, American Homes 4 Rent and Brookfield Asset Management.

While traditional equities are having a difficult year, institutional investors are using physical assets like single-family rentals as a means to hedge their other investments.

See more on real estate investing from Benzinga

• New Investment Platform Lets You Become A Landlord With $100
• Investors Have Made Over $3.3 Million This Year Using This Real Estate Investing Strategy
• This Value-Add Multi-Family Real Estate Fund Is Still Creating Value In A Down Market

To read about the latest developments in the industry, check out Benzinga's real estate home page.