We’ve invested roughly $60.2 million to acquire Sunset Village, a community of 233 detached, single-family rental homes in Panama City, Florida, located along the Gulf of Mexico two-hours west of Tallahassee.

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 has 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. Learn more about the single-family rental asset class here.

As we referenced in our Q1 2022 update and more recent mid-quarter letter, our investment theses strive to identify factors that are bolstered by strong demand today and have historically performed well, both during past high inflationary periods and during downturns more broadly. For example, residential properties in the Sunbelt: In an economy where remote work is becoming the norm for more and more people, we expect that an increasing share of the population will no longer need to live in expensive gateway cities and will instead seek out locations that offer lower living costs and more agreeable climates. In addition, we’ve weighted toward these types of assets because they generally have better withstood past economic downturns; shelter, like food, is a basic need rather than a discretionary expense.

This acquisition was made by a joint venture between two Fundrise sponsored funds, the Fundrise Flagship Fund, which invested roughly $54.2 million and the Growth eREIT VII, which invested roughly $6 million, while an additional $50 million was provided through a senior loan, bringing the total projected costs to roughly $110.2 million.

Strategy

Core Plus

Acquire and operate stabilized, cash flowing real estate

  • Risk-return profile: Moderate
  • Expected timing / delay of returns: Shortly after acquisition
  • Expected source of returns: Income with some growth

More about our strategies

Note that this section is intended to provide a general overview of the Core Plus 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

We acquired this property from a major, nationally renowned homebuilder, who wrapped up construction at the community in February 2022. At the time of our acquisition, approximately 52% of the homes were occupied. The community consists of spacious three-, four-, and five-bedroom homes, each with its own attached garage and pet-friendly, fenced yard.

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. We expect to work with a professional property manager, and to be a long-term owner over the next several years to a decade.

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.

Why we invested

  • Great location: Sunset Village is located about 20 minutes away from Tyndall Air Force Base, one of the largest employers in the county. By 2023, four squadrons are scheduled to relocate to Panama City, with each squadron expected to add approximately 1,200 employees. Beyond local employment, tourism is the area’s number one industry thanks to its access to the Gulf coast, “generating over $1.63 billion in direct visitor spending and supporting over 20,000 local jobs.” About 35 minutes from Panama City Beach, Sunset Village is ideally located to enjoy the city’s biggest draw.

  • High-demand property type: We believe the privacy provided by the community’s fully detached and individual homes will be particularly attractive to renters seeking more living space, especially as norms around work and school shift.

  • High-quality asset: The property was acquired directly from a nationally recognized homebuilder who wrapped up construction in early 2022. The community consists of brand new construction with high-quality amenities, presenting no need for renovations or updates in the near future.

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

Additional Information: An investor in the Fundrise Real Estate Interval Fund (the “Flagship Fund”) should consider the investment objectives, risks, and charges and expenses of the Flagship Fund carefully before investing. The Flagship Fund’s prospectus contains this and other information about the Flagship Fund and may be obtained here. Investors should read the prospectus carefully before investing.