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July 28, 2021

The single-family rental (SFR) market is gaining a lot of attention. In the U.S. the market is now estimated to be valued at around $3.4 trillion, which is comparable to the well-established multifamily market which is estimated at $3.5 trillion (1). This boom comes at a time when rents are surging, inventory is low and people seek more space and privacy. As a result, buyers are getting priced out of the market and are turning to rentals which provide the benefits of a home without the significant, long-term investment of buying one.

In 2020, U.S. home sales increased at the fastest rate in 14 years due to low mortgage rates and an increase in remote work (4). In the country’s 50 biggest housing markets, median asking rents in March 2021 increased 1.1% annually to $1,463 per month (4). Additionally, in the first quarter of 2021, the cap rate for single-family rental homes averaged 6% and multifamily properties averaged 5.3% (3).

Institutional investors are capitalizing on the market. In the first half of 2021, institutionals spent a substantial $77 billion on acquiring SFR portfolios (2). In the past month, two major private equity firms, Blackstone Group and KKR & Co., have invested in single-family rental homes. Blackstone paid $6 billion to acquire a company that buys and rents single-family homes (3), while KKR is launching a single-family management company to purchase and manage rental homes across the country (1).

iintoo is seizing the opportunity to invest in the sector and is projecting increased demand in the next few years. The pandemic and shift to working from home have led to an increase in demand for more spacious and private accommodations, especially with outdoor space. Remote work also allows people to move away from the city and find more affordable, but less centrally located housing. The increase in demand for single-family homes has sent housing prices soaring, forcing many potential buyers to opt to rent properties instead. Additionally, young families prefer to invest in more flexible and liquid investment options rather than investing in a home (5).

iintoo also sees the single-family home market as an opportunity for diversification within a real estate portfolio as it complements multifamily assets and provides geographic variety.

iintoo’s latest single-family portfolio in Louisville, Kentucky is capitalizing on the benefits of investing in single-family rentals. The offering consists of 178 mid-century houses spread across six neighborhoods and presents a value-add opportunity. Louisville has been named one of the top cities for renters in 2021 by Forbes Magazine (6). If you are interested in learning more about this deal, we encourage you to reach out or sign up to join our platform.

 

Sources:

  1. KKR Stakes a Bigger Claim in the SFR Space With New Company,” Globe St. June 28, 2021.
  2. Redfin Report Shows Institutional Buyers Flood Housing Market,” The Real Deal, May 24, 2021.
  3. Single-Family Rental Market Booms as Home Prices Soar,” The Real Deal, July 12, 2021.
  4. Blackstone Bets $6 Billion on Buying and Renting Homes,” WSJ, June 22, 2021.
  5. Why millennials don’t like real estate,” Live Mint, October 29, 2018
  6. Best Cities For Renters 2021 – Forbes Advisor,” Forbes, March 2, 2021.