Competition to Rise in the Single-Family Market // Doorvest vs. Wall Street

Real estate remains popular for investors seeking higher returns on investments. Hedge fund managers and other Wall Street investors understand the power of owning single-family rental properties.

Over the last decade, institutional investors have been making big waves in single-family markets, acquiring inventory left and right - increasing their market share. As a result, everyday people have faced new headwinds undermining the individual investor rental ownership model.

Blackstone Inc. was one of the more recent companies to make headlines, raising more than $30 billion in capital for its global property drawdown fund, clearly seeking to plant its flag as one of the major institutional real estate investors in the United States.1

While the market dealt (and continues to) with volatility and uncertainty last year, Wall Street seized this opportunity to prepare and build its funds. As competition rises from Wall Street with deep pockets, it will soon be more challenging for ordinary folks to invest in single-family rentals.

The good news is that the Doorvest model makes it easy for individual investors to compete against institutions - we can leverage our strong teams, capital, and relationships to source investment opportunities. And the best part, we pass back 100% ownership to our clients.

Impacts Institutional Investors Have on SFR Markets

Unfortunately, the trend of institutional investors penetrating the SFR market is far from over. Over the last two or three years, there has been a notable uptick in corporations raising money to create massive funds to target opportunistic SFR investments, with no signs of slowing.

Companies like Blackstone pouring tons of money into the market are ultimately helping to contribute to the real estate imbalance for homeowners and real estate investors.

According to the National Association of Realtors (NAR), approximately 13% of residential properties were purchased by institutional buyers, up from 2020.2 Nevertheless, some experts predict institutional investors will control over 40% of the single-family rentals in the United States by 2030.2

Institutional buyers paid, on average, 26% below the state median home price for most purchases in 2022.3 This is because institutional buyers have the funds that allow them to make cash offers and provide other incentives to sellers.

As a result, as we head into Spring when the real estate market typically heats up, we’re expecting more competition between institutional investors and individual investors.

What Makes Doorvest Unique

Doorvest makes it easy for everyday, busy professionals to leverage institutional superpowers. However, they can reap the benefits of an individual investor by owning the property outright, leveraging its’ appreciation and equity, and taking advantage of tax benefits.

Institutional investors' impact on the single-family rental market has not gone unrecognized. Individual investors can combat creeping gains of market share by institutional investors by strategically using Doorvest.

We level the playing field so individual investors like you can play the game like wall street.

We have developed relationships throughout the real estate industry, giving us a competitive advantage. We pass these benefits on to you as we purchase investment properties on your behalf through our full-service real estate investing platform.

Unlike many extensive institutional real estate investment funds, Doorvest passes 100% ownership back to you as the investor. By leveraging our process and technology, you gain enhanced purchasing power and economies of scale, thereby revealing more investment opportunities and allowing you to make better investment decisions.

Our goal isn’t to snuff out the individual investor model but rather supercharge it to be more efficient and competitive. Doorvest helps level the playing field so that individual investors, such as yourself, can continue to have the opportunity to generate wealth by owning investment real estate.

Sources

1 Wong, N. (2023, April 11). Blackstone Raises More Than $30 Billion for Giant Real Estate Fund. Bloomberg.com.https://www.bloomberg.com/news/articles/2023-04-11/blackstone-raises-more-than-30-billion-for-giant-property-fund#xj4y7vzkg?leadSource=uverify%20wall?leadSource=uverify%20wall?leadSource=uverify%20wall

2 National Association of Realtors Research Group. (May 2022). Impact of Institutional Buyers on Home Sales and Single-Family Rentals [Slide show; Power Point Presentation]. National Association of Realtors.https://cdn.nar.realtor/sites/default/files/documents/2022-impact-of-institutional-buyers-on-home-sales-and-single-family-rentals-05-12-2022.pdf

3 Waters, C. (2023, February 22). Wall Street has purchased hundreds of thousands of single-family homes since the Great Recession. Here’s what that means for rental prices. CNBC.https://www.cnbc.com/2023/02/21/how-wall-street-bought-single-family-homes-and-put-them-up-for-rent.html