We’re pleased to announce that we’ve invested $10.8 million to acquire The Lofts at Rose Monte, a stabilized 52-unit rental townhome community located in the Brentwood area of Nashville, Tennessee, about 25 minutes south of downtown.

Along with this acquisition, we’ve also invested $4.6 million to acquire an adjacent parcel, on which we plan to expand the existing community.

At a strategic level, this investment fits within our affordably-priced Sunbelt apartment / rental housing thesis. From millennials to retirees, a broad group of Americans have been taking part in a “great migration” from north to south over the past decade, driving continued demand for well-priced, well-located real estate, and steady returns for disciplined investors.

As we stated in our mid-year letter to investors, we believe that this long-term trend has only been further accelerated by the pandemic. In an economy where remote work becomes the norm, an increasing share of the population won’t need to live in expensive gateway cities, instead seeking out places that offer a more affordable cost of living and a more agreeable climate.

Business plan

Built in 2017, the existing structures are in excellent condition, and the property was 94% occupied at acquisition, having maintained similarly strong levels of occupancy through the course of the COVID-19 pandemic. Based on our analysis of comparables in the area, we believe there is an opportunity to increase rents as leases turn over.

Over the next two years, we plan to undertake a major expansion on the adjacent land. Our goal is to build an additional 170 - 180 rental townhomes, bringing the total size of the finished community to roughly 225 units.

At that scale, we should be able to improve operating efficiency, while at the same time having increased the overall property value into a range that fits within the typical acquisition parameters of a large institutional buyer.

We expect the duration of this investment to be in the neighborhood of seven to ten years.

Why we invested

While the extent of the negative impacts of the COVID-19 pandemic on the broader economy remains uncertain, we believe this investment is well-positioned not only to withstand a prolonged economic downturn, but to potentially benefit from more permanent shifts in behavior that may result.

  • Healthy local economy: Between 2010 and 2019, the Nashville area’s population growth has exceeded the national average by more than 75%. With the recent growth, affordability has become a top concern, making suburban areas like Brentwood attractive to both renters and homebuyers.
  • Social distancing-friendly: The community offers a combination of townhomes and direct-entry apartments, which we believe will be particularly attractive to renters who are seeking an additional level of social distancing, or who simply need more living space as norms around work and school shift.
  • Income-generating asset: The property was roughly 94% occupied at the time of our investment, generating consistent cash flow through rental income.

As always, if you have any questions or feedback, please visit our help center or reach out to us at investments@fundrise.com.