The real estate investment platform Fundrise announced that it acquired Emerald Lakes, a community of 106 detached single-family rental homes in Ocean Springs, Mississippi.
Two Fundrise sponsored funds formed a joint venture to acquire the property. The Growth eREIT VIII, which invested $2 million and the Fundrise Interval Fund, which invested roughly $17.8 million. The additional $17.8 million was financed through a portfolio credit facility.
The rental community was acquired from a national homebuilder, who completed construction on the project in early 2021. At the time of the acquisition, approximately 63% of the homes were occupied.
Related: Fundrise Review
Single-Family Rental Market
Both institutional and individual investors have been purchasing a record number of residential properties over the past year. According to Redfin, investors purchased $64 billion worth of homes in the third quarter of 2021, accounting for 18.2% of houses sold in the U.S. during that time.
Many individual investors are apprehensive about purchasing real estate as an investment right now. Home prices are at an all-time high and fears of another housing crash are rising. However, experienced real estate investors see the long-term value in purchasing income-producing real estate during any stage in the market cycle.
While property values will probably decline, or at least stagnate, at some point, rental prices have historically increased consistently, regardless of sale prices. Investors looking at a seven to 10 year investment strategy can potentially capture greater total returns by investing now instead of waiting for prices to drop.
Real Estate Investments for Retail Investors
Retail investors that want to capture the growth of the residential rental market have several options outside of purchasing their own property.
A handful of publicly traded real estate investment trusts (REITs) invest in portfolios of single-family properties and allow retail investors to easily add real estate assets to their portfolios. However, publicly traded REITs can experience significant price volatility since shares are traded on public stock exchanges.
A growing number of investors have been turning to private market opportunities to invest passively in real estate, such as Fundrise and other real estate crowdfunding platforms. This type of investment often comes with larger minimum investments than publicly traded REITs, but can also provide more consistent and predictable returns.
The downside, however, is that private market investments rarely have the same liquidity options as a publicly traded REIT. While a REIT’s shares can easily be sold at any time, most real estate crowdfunding platforms have minimum hold periods that often range from three to five years or more.
You can explore current offerings for private market real estate investments through Benzinga’s Alternative Investment Screener.
Image source: Emerald Lakes website
