Crowdfunding puzzle piece concept

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Crowdfunding Helps Investors Score Hot Rental Homes

August 10, 2021

With the single-family rental market booming, some aspiring investors are finding a way to take advantage without buying a home or becoming a landlord. Crowdfunding is allowing consumers to buy into the ownership of a home for as little as $500.

A company called Fundrise, which since 2012 has offered crowdfunding in the commercial real estate sector, announced an entrance into single-family rental homes. The company is buying up thousands of homes from builders such as D.R. Horton. It is managing the homes but offering returns to investors through its fund, CNBC reports.

“What Fundrise does is allows individuals to get access to private real estate at the same if not better terms as institutions, and that literally never happened before,” Ben Miller, co-founder and CEO of Fundrise, told CNBC. “There is a lot of institutional demand, and the fact that individuals can get at it through our website through the same or lower costs defies the normal Wall Street expectations.”

Fundrise charges a 1% annual fee. It’s intended as a long-term investment over five years or longer, Miller said.

Single-family rentals have been growing in demand since the pandemic as renters seek out more space. Data from CoreLogic shows single-family rents increased in May by 6.6% year over year.

Institutional investors are speeding up their purchases. Invitation Homes, which is the largest single-family rental REIT, announced it was buying 7,500 new homes from the PulteGroup over the next five years. The homes would be built specifically with rental purposes in mind.