PHOENIX, ARIZONA (October 24, 2022) – Trevor Koskovich, President – Investment Sales, recently shared his views on the single family rental/build-to-let (BTR) market in an article published by Business Intern titled: “Online real estate investment firm Fundrise is paying handsomely market value for housing for some build-to-let communities. Here’s why he says it’s always a winning strategy.
The story used Cypress Bay-Homes for Rent as a case study of Fundrise’s reasoning behind its recent purchases. The company bought the community in 2022 for $45.7 million in debt and equity, bringing the average price paid per home to $525,287.36 — a 42% increase over the model’s starting price on more expensive in the neighborhood and a much larger increase over smaller model homes. . But when Cypress Bay is rated as an apartment building, rather than a collection of houses, it’s clear that Fundrise got a lot.
Koskovich discussed the historical context of the market environment in which Cypress Bay has existed and how it fits into the broader trends seen in BTR. The same bidding dynamics that existed in the traditional residential housing market also existed with these large communities. It was not unusual for these types of assets to receive 10 to 15 bids each, Koskovich said, although he did not comment on specific transactions.
“We were going through a lot of the same things as people trying to buy a house,” Koskovich said. “A property would be listed at $700,000 but end up selling for $850,000. The same story was happening in our industry, except it was about trading thousands for millions.
That momentum outpaced home prices for a while, with Koskovich saying many homes were selling more to institutional buyers than they would to homeowners in the same area. But times are changing.
Other topics include:
- How the housing market affects BTR
- Fundrise vs. other innovators (and the critics)
- How to value build-to-rent communities
Read the full story.