We recently acquired Amber Pines at Fosters Ridge, a 124-unit single family rental home community in Conroe, TX for a purchase price of $32.3 million. A component of the greater Houston metro area, Conroe is located just north of the Woodlands master-planned community and about 40 miles from downtown Houston.

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 migration from northern to southern states over the past decade, driving continued demand for well-priced, well-located real estate, and supporting steady returns for disciplined investors.

As we stated in our mid-year and year-end letters to investors, we believe that this long-term trend has only been further accelerated by the pandemic. In an economy where remote work is becoming the norm for more and more people, we expect that an increasing share of the population won’t need to live in expensive gateway cities and will instead seek out locations that offer lower living costs and more agreeable climates.

Business plan

We acquired this property from D.R. Horton (NYSE: DHI), one of the largest and most accomplished homebuilders in the country, who wrapped up construction at the property late last year. As of December 2020, 98% of the homes were already occupied.

The community consists of spacious three-, and four-bedroom homes, each with its own two-car garage and private backyard (we suggest watching the drone footage above for a closer look). Meanwhile, residents share premium community amenities, including a pool, clubhouse, playground, and walking nature trails, providing much-desired community benefits while preserving individual families’ privacy and space.

We acquired the property in an all-cash transaction, with plans to secure financing in the near future with the aim of targeting stronger returns, and freeing up cash to deploy elsewhere. We expect to continue working with the in-place professional property manager, and to be a long-term owner over the next several years to a decade.

Given how recently construction of the community was completed, we anticipate that the homes will remain competitive, attract tenants, and support rent growth for the foreseeable future without significant capital needs for renovations. As with our other equity investments into stabilized properties, our goal is to earn consistent cash flow from rental income over the course of the investment, with the potential for long-term upside by selling the property for more than we invested into it.

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.

  • Fast-growing area: Just 40 miles outside of Houston, Conroe was named one of top ten fastest-growing large cities in the country by the US Census, seeing a 39.3% population growth from mid-2010 to mid-2019.
  • Social distancing-friendly: We believe the privacy provided by the community’s fully detached and individual homes will be particularly attractive to renters 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 98% 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.

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Note about projected return for this investment: To be conservative, the return projection range for this investment includes scenarios in which we do not obtain senior financing and continue to own the property outright with no debt. However, we intend to secure senior financing in the near future, and at that point the return projections may be subject to re-forecasting (as always there can be no guarantees of any returns, or that we will be successful in our plan to obtain senior financing).