Single-family rentals have been a major focus for many institutional investors over the past couple of years, as housing prices have skyrocketed and homeownership has become less affordable for many Americans.
Investments in single-family rentals seem to be paying off, considering the average rent across the country has increased by about 20% since January 2021 and by as much as 38% in certain Sunbelt markets.
The real estate investment platform Fundrise launched its Flagship Real Estate Interval Fund in January 2021, just in time to take advantage of the massive rent growth. The fund’s first single-family acquisition was the first phase of a 132-unit rental home community in the greater Tampa Bay area, where average rent prices have increased by nearly 33% since the fund made the investment.
The Interval Fund has since made several investments ranging from single homes to a community of over 160 homes in several of the fastest-growing Sunbelt states, including Arizona, Texas, Mississippi, Alabama, Georgia, the Carolinas and Florida.
Goldman Sachs (NYSE:GS) provided financial backing to the fund in June 2021, with a $300 million credit facility to scale its investments in single-family homes.
The Fund’s portfolio now includes 1,361 single-family homes plus multiple development sites with 802 single-family units planned for future delivery.
Most of the single-family rental investments have been made as part of a joint venture between the Interval Fund and one of Fundrise’s eREITs. According to a recent SEC filing, the total investment cost of the Interval Fund’s single-family rental portfolio is $392,535,000 and now has a fair market value of $479,962,000.
The fund’s total net assets, including its investments in single-family rentals, multifamily properties and industrial properties, is $985,083,000.
The Fundrise Real Estate Interval Fund produced a total return of 29.35% in 2021 and has produced a 5.6% return so far in 2022. The platform has also produced positive returns for 21 consecutive quarters across all of its funds, with an average dividend yield of 5.42%. After six years, the average total return is 83.5%.
See also: Fundrise Review
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