PHOENIX, Ariz. (October 24, 2022) – Trevor Koskovich, President of Investment Sales, recently Business Insider The headline reads: “Online real estate investment firm Fundrise is paying more than housing market value for some build-to-rent communities. Here’s why it says it’s still a winning strategy.”
This story uses Cypress Bay-Homes for Rent as a case study behind the recent purchase of Fundrise. The company purchased the neighborhood for $45.7 million in debt and equity in 2022, bringing the average price paid per home to $525,287.36 — 42% more than the starting price of the most expensive model on the block and less than the smaller model homes The increase was much larger. However, when Cypress Bay was assessed as an apartment building rather than a group of dwellings, it was clear that Fundrise had a lot to gain.
Koskovich discusses some historical context for the market environment in which Cypress Bay exists and how it fits into the larger trends observed in BTR. These larger communities also have the same bidding dynamics as the traditional residential market. It is not unusual for these types of assets to receive 10 to 15 bids each, Koskovich said, although he did not comment on specific deals.
“We’re going through a lot of the same things as people trying to buy a home,” Koskovich said. “A property is listed for $700,000, but it ends up selling for $850,000. The same story is happening in our industry, except for thousands of For millions.”
That dynamic has outpaced house prices for some time, with Koskovic saying that many homes are selling for more to institutional buyers than to owner-occupiers in the same area. But times are changing.
Other topics include:
- How the real estate market affects BTR
- Fundrise and other innovators (and critics)
- How to Evaluate a Build-to-Rent Community
Read the full article.