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Grabbing Opportunity In Texas Migration Numbers, Rental Fund Buys Dallas-Area Single-Family Home Development

·2 min read

A joint venture between two Fundrise-sponsored funds has led to the acquisition of 18 rental homes in the Ridgeview Villas community in Allen, Texas, north of Dallas.

Based in Washington, D.C., Fundrise has become a leading real estate investment platform since its launch 10 years ago.

The company’s most recent acquisition in Allen was made possible by the combined investment of its Fundrise Interval Fund ($7.3 million) and the Growth eREIT VII ($805,000). Last year, Fundrise secured a $300 million credit facility from Goldman Sachs Group Inc. (NYSE: GS) to finance new home construction and acquisitions.

Fundrise recently has been acquiring single-family investment rentals, including a community of 48 single-family homes in South Carolina, 106 homes on the Gulf Coast in Mississippi and 120 homes in Pensacola, Florida. The company in February closed on the Cypress Bay community in Palm Bay, Florida. Developed by D.R. Horton Inc. (NYSE: DHI), Cypress Bay consists of 87 detached, single-family rental homes.

The migration of Americans from northern to southern states over the past decade has driven demand for affordable and well-located housing options, and Fundrise believes its Ridgeview Villas in the Dallas area meets its rental housing objectives.

A 2021 Texas Realtors Relocation Report found that between 537,000 and 582,000 people moved to Texas in 2019, with the state ranking second behind Florida in relocation activity that year. The U.S. Census reports another influx of 170,307 residents made Texas home between 2021 and 2022.

According to Dallas-based real estate technology firm RealPage Inc. (NASDAQ: RP), the average rental price in North Texas rose 17.5% year over year, with The Dallas Morning News reporting the average rent in the area at $1,526 a month.

Fundrise also points to its residential properties in the Sun Belt, where it expects a growing number of people will no longer need to live in expensive gateway cities and instead seek locations offering lower living costs and more agreeable climates. The factors the company considers when acquiring properties include assets that have positively withstood past economic downturns.

Texas also leads the nation in institutional buying, with companies buying 28% of single-family homes — double the national average of 13%. The state also saw the second-largest percent increase in properties acquired by institutional buyers (4.6%) from 2020 to 2021.

The Flagship Interval Fund had average assets under management of just over $851 million and provided a net total return of 5.11% to investors in the first quarter of 2022.

See also: Fundrise Review

Photo: Courtesy of Fundrise

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