Monthly SFR Deals Highlight (February 2024)
Our monthly review of the most interesting SFR acquisitions, dispositions, and financing events.
Executive Summary
Each month, we generate a roundup of the most interesting deals completed by reviewing transaction-level data across single family acquisitions, dispositions, and financing events.
This month, we found:
A Florida-based developer acquiring a new townhome community
An active short-term rental operator in San Antonio using seven different lenders
Dundalk, Maryland emerging as a hotspot for SFR investing
FirstKey Homes continuing to utilize Opendoor as a disposition channel
Analysis & Results
Falcone Group Acquires New Townhome Community in South Carolina
RENTYLCORE DILLARD CREEK LLC, an entity tied to the Falcone Group, acquired a new construction townhome community from Lennar in February. They took out a $5.4 million loan from Arbor Realty Trust to finance the acquisition.
The community, called Latitude 34 at Dillard Creek, is located in Rock Hill, South Carolina. It consists of 34 townhomes.
The Falcone Group is a major real estate developer based in Florida. They have significant experience with both multifamily and single-family rental development projects. This acquisition aligns with their focus on Sun Belt markets.
Texas Dream Rentals Active in San Antonio
Texas Dream Rentals was the borrower with the most distinct lenders used in February, leveraging seven different lenders across 10 properties. Capital Fund, Longhorn Funding, and Easy Street Capital were among the lenders utilized.
All 10 properties financed were located in San Antonio, with 6 of them being new acquisitions. Texas Dream Rentals primarily operates short-term rental properties in the greater San Antonio area, with a few properties in Corpus Christi as well.
The company's willingness to work with a variety of lenders likely provides them flexibility as they continue expanding their portfolio. It will be interesting to monitor if they begin consolidating their debt facilities as their portfolio grows and matures.
Dundalk, Maryland Sees Surge in SFR Investing
The ZIP code seeing the most single-family rental investment activity in February was Dundalk, Maryland.
There were 30 loan originations in Dundalk last month, among the highest of any ZIP code nationwide. The median origination size was $162,000, with 14 different lenders active in the area.
25 distinct borrowers acquired properties, with the most active borrower taking out two loans. The fragmented nature of borrowers points to Dundalk attracting interest from a diverse set of local investors.
Dundalk's demographics reveal it to be a working-class community. Using consumer data, the most common resident profile is "Coupon Clippers" - budget-conscious married couples living in suburban homes. With slightly below average incomes, they allocate much of their spending to essentials like transportation, healthcare, food and beverage.
The relative affordability of homes, healthy yields achievable, and proximity to Baltimore seem to be factors putting Dundalk on the map for real estate investors. We'll continue monitoring if this momentum persists.
FirstKey Homes Continues Selling to Opendoor
After selling 80 homes to Opendoor in January, FirstKey Homes continued to leverage Opendoor as a disposition channel - selling another 55 properties to them in February.
The sold properties spanned 11 different metros, with Indianapolis (14), Miami (8) and Atlanta (8) seeing the highest concentration.
Opendoor accounted for the vast majority of FirstKey's 77 total dispositions in February, essentially purchasing all homes that FirstKey sold in markets where Opendoor operates. FirstKey also sold 13 homes in Chicago to a mix of individual buyers and local investors.
FirstKey's ongoing sales to Opendoor are notable, as institutions were initially speculated to be a key supply channel for Opendoor's inventory when the iBuyer first started purchasing rental homes. The relationship between the two companies will be an ongoing storyline to follow.
Note: we’re experimenting with a this format highlighting interesting deals from the past month. Reply letting us know what you think!