SFR3 Breakdown
Portfolio holdings, gross rental yields, purchase and sale activity, and more.
Executive Summary
SFR3 has built a portfolio of 9,000+ single-family rental properties across the country, with almost half of the portfolio held in Ohio, South Carolina, and Georgia.
Compared to public SFR REITs like Invitation Homes and American Homes 4 Rent, SFR3 has focused on workforce housing, buying lower priced homes in more affordable areas.
Detailed information about SFR3’s recent property sale activity and gross yields by metro are available for paid subscribers at the end of the article. While in aggregate sales have been profitable at an average gross profit of $59k+, there has been significant variance in returns at the property-level with some deals highly profitable and others suffering significant losses.
Gross yield (calculated as twelve times estimated annual rent divided by the purchase price) is strong across SFR3’s major metros, with the median in the low-twenties.
Introduction
SFR3 is a leading SFR fund with a portfolio of 9,000+ properties nationwide. With a focus on affordability and value, SFR3 has a lower median purchase price of the homes it owns at $60k compared to other SFR funds (for comparison, FirstKey Homes has a median acquisition price of $267k). While many SFR funds have a predominant focus on the Southeast, over 40% of the homes owned by SFR3 are in the Midwest, with Ohio as the state with the most properties owned.
SFR3 isn't the only SFR fund focused on workforce housing that has been selling properties - VineBrook has also been active, as highlighted in a recent research piece. Unlike for higher-end properties held by other SFR funds, there are few bulk buyers of workforce housing portfolios. SFR3 will likely need to sell each property individually by listing it on market, rather than finding a way to coordinate a bulk portfolio transaction with another fund. As highlighted in the Sales Activity section, year-to-date transaction data supports this pattern of fragmented one-off sales.
Data Overview
At SFR Analytics, we leverage nationwide deed, assessor, and rental listing data to track the single family rental market. To generate this analysis, we’ve:
Identified and reconciled the entities that SFR3 has purchased homes under
Matched rental listing data to the underlying ownership information that links an entity to SFR3
Aggregated additional sources of data, like school ratings, to provide additional context about the neighborhoods where properties are held
Note: A more detailed breakdown of data and methodology used is available at the bottom of the post.
Analysis & Results
Geographic Distribution
SFR3 has built a 9,000+ home portfolio spanning the Midwest and Southeast.
SFR3’s largest states by ownership are Ohio and South Carolina, followed by Georgia and Missouri. For comparison, the top three states that American Homes 4 Rent owns properties in are Texas, Florida, and North Carolina; for Invitation Homes, the top three states are Florida, Georgia, and California. SFR3’s portfolio has a significantly heavier tilt towards the Midwest than most large SFR funds — in recent years offering better gross yields with less appreciation than core SFR markets outside the Midwest.
Purchase Price Distribution
Lower cost homes make up the bulk of SFR3’s portfolio, with a median purchase price of $60k across the portfolio. On average, homes owned by SFR3 have a square footage of roughly 1,200 square feet, compared to almost 2,000 square feet for homes owned by other large funds.
Acquisition History
SFR3 acquired ~700 properties in 2019, then almost 1,000 in 2020. Purchase volume accelerated significantly in 2021 and 2022, with 3,300+ properties bought in 2021 and 2,800+ properties purchased in 2022. With the rise in interest rates, SFR3 has slowed acquisitions, acquiring less than a couple hundred year-to-date in 2023 and will be a net seller in 2023.
School Ratings
SFR3’s focus on lower purchase price homes dedicated to workforce housing shows up in the difference in rating for schools located near homes it owns compared to the schools near homes owned by American Homes 4 Rent and Invitation Homes. VineBrook, another fund focused on workforce housing, has similarly lower rated schools.
Sales Activity & Market-Level Gross Yields
Recently, SFR3 has been an active seller, shedding properties from its portfolio. Across properties sold to date, SFR3 has generated an average gross profit (resale price less purchase price) of over $59k.
Note: the remainder of this article is available to paid subscribers, sign up below for access. Paid subscribers get full access to weekly data-rich articles about the SFR market and select additional articles only available to paid subscribers.