We’ve invested $847,000 to acquire four single-family rental homes within the Trinity Crossing neighborhood of Forney, Texas, part of the greater Dallas Fort Worth area.

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.

Strategy

Value Add

Acquire real estate that needs improvements and / or lease-up

  • Risk-return profile: Moderate to high
  • Expected timing / delay of returns: Several months to a year
  • Expected source of returns: Growth with some income

More about our strategies

Note that this section is intended to provide a general overview of the Value Add strategy for educational purposes only, and is not meant to be representative of the specific details of any individual investment. All investments involve risk and there are no guarantees of any returns.

Business plan

By acquiring the brand-new (vacant) homes and leasing them up ourselves, we intend to get a better price, and therefore a better potential return, than if we had purchased a “finished product”.

We acquired these homes from Lennar Corp. (NYSE: LENN), one of the largest and most accomplished homebuilders in the country, who wrapped up construction on these homes earlier this year.

The homes are part of a newly-developed housing community consisting of roughly 900 for-sale single-family homes. We plan to manage these four homes as part of a portfolio of properties we own in the Forney area, including Windmill Farms, a 102-unit single-family rental home community that is still under construction.

Our intent with this and other investments in single-family rental home communities is to be a long-term investor, building a scaled portfolio that generates consistent rental income, while at the same time being positioned to capture what we believe will be outsized price appreciation thanks to a confluence of demographic factors driving demand across the Sunbelt. While the properties, of course, look different than multifamily apartments, the underlying investment thesis is ultimately very similar.

We have engaged a leading property manager of single-family rental communities across the US.

While we acquired the homes in an all-cash transaction, we intend to obtain portfolio-level financing, with the aim of increasing expected returns and freeing up cash to deploy elsewhere.

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.

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