Monthly SFR Deals Highlight (January 2024)
Introducing our monthly review of the most interesting SFR acquisitions, dispositions, and financing events.
Note: we’re experimenting with a new format highlighting interesting deals from the past month. Reply letting us know what you think!
Executive Summary
Each month, we’ll 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 major institutional investor selling homes to Opendoor instead of buying from Opendoor
Workforce SFR portfolio financings
Luxury redevelopment projects getting refinanced
Analysis & Results
FirstKey Homes Sold 80 Properties to Opendoor
January 2024 was the first month that Opendoor bought more properties from institutional SFR funds than it sold to them, making them a net buyer. To read more about the decline in institutions buying from Opendoor, read our recent breakdown.
In the last week of January, FirstKey sold 80 homes to Opendoor. The properties were spread across several metros, but 50 of the 80 were accounted for by Indianapolis (28), St. Louis (12), and Kansas City (10).
This is the first time that a large institution has sold this many homes to Opendoor. While on the surface it might be surprising, with Opendoor primarily known for its direct to consumer presence, it actually fits well within the vision of Opendoor’s role of providing liquidity for residential real estate. Viewed in this way, Opendoor’s transaction fees alone are enough to make these types of deals profitable for the company without renovations to enhance the value of the property in hopes of generating a positive spread on the resale price versus purchase price like a flipper.
CoreVest Portfolio Loan of $5,000,000 in Detroit
CoreVest originated a $5,000,000 portfolio loan across 50+ single family homes in Detroit. The borrower was Circuit Avenue - a real estate investment firm based in Detroit.
The properties are standard “workforce housing” single family rentals that Detroit as a market is well known for. All of the properties are between 800-1,200 square feet and built between the years 1920 to 1960. The homes were acquired between three to nine months ago, for mostly between $40k to $80k per property. Gross yields for these types of properties tends to be strong, with many renting for $1,200+/month (for more about gross yields for SFR acquisitions, read our recent breakdown).
A few images below of properties in the Detroit portfolio:
Large Genesis Construction Loans in Los Angeles
Genesis completed two of the largest single family construction loans originated in January.
Genesis was the lender on a $9,794,000 origination at 1047 Corsica Dr, Pacific Palisades, CA 90272. The property itself has an interesting history: it was purchased in May 2021 with a loan from First Republic, then a second First Republic loan was originated in March 2022 for $7,200,000. Relying on transaction-level data, we weren’t able to verify this loan being paid off, but it’s likely the most recent Genesis loan was a refinance of the March 2022 First Republic loan.
SFR Analytics also aggregates and processes nationwide building permit data, revealing some of the renovation work that has been done on the property following the acquisition:
December 2021 - there was a demolition permit approved for the 1-story single family home + detached garage
May 2022 - permits were filed for grading and construction of a two-story single family home with a basement and attached garage
Throughout 2022-2023 - several permits were filed covering electrical checks, a new gas system, and a fire sprinkler system
The most recent permits identified are from November 2023 and include a new swimming pool and spa
The other large Genesis loan was a $22,190,000 loan for a 7,000 square foot beachfront home in Malibu.
The property was acquired in February 2022 with a $19,000,000 construction loan from Genesis. TriWest Development, a development firm that specializes in ultra high end single family development projects, was the borrower on the deal.
It’s interesting to see a few refinances done on large-scale single family redevelopments to start the new year. The developers involved in both projects are experienced; time will tell what the final products look like and how much the developers will be able to generate in sale proceeds.
Kiavi Portfolio Financing
If you live in the Bay Area and listen to radio stations covering Classic Rock, Sports Talk, or News Talk, then you’ve likely heard quite a few ads from John Buys Bay Area Houses.
It turns out “John” is active buying homes elsewhere, too!
Kiavi recently financed a $2,288,000 portfolio loan to John Buys Bay Area Houses for a St. Louis workforce housing portfolio.
Over the past couple of years, John Buys Bay Area Houses has acquired dozens of single family homes across St. Louis and Kansas City. In addition to identifying these transactions from deed data, we matched historical rental listings data to the properties included in the portfolio loan. The majority of the properties were being rented for $1,500 to $2,000 per month, while likely being purchased for high five figures (because Missouri is a non-disclosure state, these values were estimated using other sources). In addition to starting to build a single family rental portfolio, John Buys Bay Area Houses continues to operate a sizable fix-and-flip business.
John Buys Bay Area Houses has a $2,000,000 loan outstanding with Kiavi on a single property in the Bay Area. The Sunnyvale, CA property was purchased in October 2023 for $1.8m, and unlike the ultra high end properties that Genesis funded covered earlier in this article, it’s a fairly standard 2,300 square foot home built in 1956.
It’s rare to see a company running two strategies so meaningfully different and geographically dispersed. It caught out attention and we’ll continue to monitor.
Note: we’re experimenting with a new format highlighting interesting deals from the past month. Reply letting us know what you think!