Fractional ownership gives investors new options after being out of the current real estate market


A long period of historically low interest rates and record inflation pushed the housing market into territory where many Americans found themselves off the market. As the housing market appears to be cooling, mortgage rates hit a 12-year high last week, further pushing up the total cost of home ownership.

The idea of ​​owning a home being part of the American Dream life has been fading for quite some time. Younger generations have already put off buying a home until later in life. The current costs associated with buying a home now make it difficult for potential first-time home buyers to justify the move from renting to owning.

When looking at the investment activity of institutional investors, including funds like black rockfor the past two years, it almost seems like Wall Street predicted that the current situation would turn out exactly as it is.

Blackstone Real Estate Income Trust Inc.. (“BREIT”), an unlisted real estate investment trust owned by Blackstone Inc. Bx has completed over $22 billion in multi-family investments so far in 2022 with its acquisition of American University Communities, Inc.VAC, Preferred Apartment Communities Inc. APTs and Resource REITs (unrated).

In 2021, Invitation Houses Inc. INVH spent nearly $2 billion buying 4,802 homes across the country and several other private investors bought entire neighborhoods. Building-to-let communities are being built in record numbers, with 6,740 new built-to-rent homes completed in 2021 and twice as much under construction as in the first quarter of 2022.

Opportunities for individual investors

Buying an apartment complex, acquiring an entire neighborhood, or developing a build-to-let community may not be an option for most individuals. However, an increasing number of opportunities are reaching retail investors through platforms that fund new developments and acquisitions through individual investors.

the Jeff Bezos backed real estate investment platform, Homes arrived, allows non-accredited investors to become co-owners of rental properties with as little as $100. Since its launch last year, the company has financed 88 rental properties worth approximately $35 million.

Platforms like crowd street and Realty Mogul offer accredited investors opportunities to finance large-scale multi-family projects, build-to-let communities, and even mobile home parks.

Although projects funded through these platforms may pale in comparison to those funded by hedge funds and publicly traded REITs, they are rapidly gaining market share and providing options for people who might otherwise be shut out of the real estate market. evolving.

See also: Real estate investment offers on Benzinga Alternative Investments

picture by Dillon Kydd on Unsplash


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