In 2017, I tried to get into the real estate game. Up until that point, my personal investment portfolio included mostly equities. I knew I had to diversify, and what better way than by investing in one of the most stable asset classes in the country?
I also saw the tangible benefits of owning residential real estate: stable cash flows, asset appreciation, and tax advantages. Growing up, my parents owned rental properties, and I experienced firsthand the cushion of predictable rent checks coming in each month. In 2015, my brother had purchased a rental home and saw its value appreciate 40% over the two-year period. My decision was made, but where to start?
I soon realized adding real estate to my portfolio would be a much more difficult process than buying a portfolio of stocks through my Fidelity account. Why?
I wish I could say all the work was worth it in the end, but after putting in five offers and losing in the bidding process on all of them, I gave up. I couldn’t get into the residential real estate investment game after all.
Access to residential real estate investing
Around the same time, Andrew Luong and Justin Kasad were figuring out how to help folks like me (and millions of other prospective real estate investors) own residential rental properties without all the friction.
In 2020, the longtime friends founded Doorvest, a technology platform that democratizes access to real estate. Customers sign up online, specify the type of home they’re looking for, and place an initial deposit. Doorvest handles the rest, including finding and acquiring the home, renovating, placing tenants, and managing the property. The customer then purchases the home from Doorvest, becomes the new owner, and starts collecting monthly rent checks.
Doorvest has acquired over 100 homes for customers who are based in more than a dozen states. Today, the company purchases homes in the Houston and Dallas metro areas, with plans to expand to additional states in the near term. Customers love the product because it provides them access to an attractive asset class that traditionally had high barriers to entry. Average annual returns (including asset appreciation) for their customer base is 18%, and 96% of current customers say they would purchase another home with Doorvest.
In the U.S., the single-family rental (SFR) market is massive at $220 billion in annual rental income. About 17 million Americans own an SFR, which as an asset class has delivered an 8% average annual return over the last three decades.
Investors also love that the SFR market is highly resistant to economic downturns. In a downmarket, home values could depreciate, but rental demand increases and rental prices remain stable or increase. During the COVID-19 pandemic, SFR rent collection rate averaged 95% versus 76% for multi-family, and historically rent collection has been at 98%. In an upmarket, home value appreciates, and rents remain stable or increase.
We’re excited to lead Doorvest’s $13 million Series A equity financing alongside an incredible group of investors and angels including Mucker Capital and executives from Invitation Homes, Opendoor, Ribbon, Sundae, and Homeward. If you’re interested in SFRs, find out how it could work for your own investment portfolio here. I for one am excited to finish my own real estate journey that began nearly five years ago.
In 2017, I tried to get into the real estate game. Up until that point, my personal investment portfolio included mostly equities. I knew I had to diversify, and what better way than by investing in one of the most stable asset classes in the country?
I also saw the tangible benefits of owning residential real estate: stable cash flows, asset appreciation, and tax advantages. Growing up, my parents owned rental properties, and I experienced firsthand the cushion of predictable rent checks coming in each month. In 2015, my brother had purchased a rental home and saw its value appreciate 40% over the two-year period. My decision was made, but where to start?
I soon realized adding real estate to my portfolio would be a much more difficult process than buying a portfolio of stocks through my Fidelity account. Why?
I wish I could say all the work was worth it in the end, but after putting in five offers and losing in the bidding process on all of them, I gave up. I couldn’t get into the residential real estate investment game after all.
Access to residential real estate investing
Around the same time, Andrew Luong and Justin Kasad were figuring out how to help folks like me (and millions of other prospective real estate investors) own residential rental properties without all the friction.
In 2020, the longtime friends founded Doorvest, a technology platform that democratizes access to real estate. Customers sign up online, specify the type of home they’re looking for, and place an initial deposit. Doorvest handles the rest, including finding and acquiring the home, renovating, placing tenants, and managing the property. The customer then purchases the home from Doorvest, becomes the new owner, and starts collecting monthly rent checks.
Doorvest has acquired over 100 homes for customers who are based in more than a dozen states. Today, the company purchases homes in the Houston and Dallas metro areas, with plans to expand to additional states in the near term. Customers love the product because it provides them access to an attractive asset class that traditionally had high barriers to entry. Average annual returns (including asset appreciation) for their customer base is 18%, and 96% of current customers say they would purchase another home with Doorvest.
In the U.S., the single-family rental (SFR) market is massive at $220 billion in annual rental income. About 17 million Americans own an SFR, which as an asset class has delivered an 8% average annual return over the last three decades.
Investors also love that the SFR market is highly resistant to economic downturns. In a downmarket, home values could depreciate, but rental demand increases and rental prices remain stable or increase. During the COVID-19 pandemic, SFR rent collection rate averaged 95% versus 76% for multi-family, and historically rent collection has been at 98%. In an upmarket, home value appreciates, and rents remain stable or increase.
We’re excited to lead Doorvest’s $13 million Series A equity financing alongside an incredible group of investors and angels including Mucker Capital and executives from Invitation Homes, Opendoor, Ribbon, Sundae, and Homeward. If you’re interested in SFRs, find out how it could work for your own investment portfolio here. I for one am excited to finish my own real estate journey that began nearly five years ago.
Read more
The views expressed here are those of the individual M13 personnel quoted and are not the views of M13 Holdings Company, LLC (“M13”) or its affiliates.This content is for general informational purposes only and does not and is not intended to constitute legal, business, investment, tax or other advice. You should consult your own advisers as to those matters and should not act or refrain from acting on the basis of this content.This content is not directed to any investors or potential investors, is not an offer or solicitation and may not be used or relied upon in connection with any offer or solicitation with respect to any current or future M13 investment partnership.Past performance is not indicative of future results. Unless otherwise noted, this content is intended to be current only as of the date indicated. Any projections, estimates, forecasts, targets, prospects, and/or opinions expressed in these materials are subject to change without notice and may differ or be contrary to opinions expressed by others.Any investments or portfolio companies mentioned, referred to, or described are not representative of all investments in funds managed by M13, and there can be no assurance that the investments will be profitable or that other investments made in the future will have similar characteristics or results. A list of investments made by funds managed by M13 is available at m13.co/portfolio.