Institutional Investors Make Up Close to 10 Percent of iBuyer Transactions

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Institutional investors are buying up properties in bulk through iBuyer programs, a new report shows.

New data from Attom Data Solutions shows that one in 10 homes purchased by the two leading iBuyer programs — Opendoor and Offerpad — were purchased by institutional buyers. Those particular buyers were buying at least 10 homes at a time. In recent months, iBuyer programs have gathered a lot of attention and added to their ranks, with Coldwell Banker launching their own “cataLIST” iBuyer program and Zillow “Instant Offers” becoming quite profligate. Offerpad just moved into North Texas, too, with plans to move into Houston and San Antonio in 2019.

So, just how many investors are buying up homes using iBuyer programs to make all-cash offers so they can turn around and lease these properties? 

According to the analysis, a total of 743 homes sold by the two iBuyers — companies that buy directly from homeowners via all-cash offers — were purchased by institutional investors so far in 2018, representing 9.6 percent of all sales by those two iBuyers combined. That is up from 293 institutional investor purchases representing 6.6 percent of the iBuyer sales in 2017, and 65 institutional investor purchases representing 3.9 percent of the iBuyer sales in 2016.

Of course, that means that more than 90 percent of iBuyer sales were to individuals, and considering that some of them are financing, that’s sure to be a complex transaction. All-cash offers, however, move quickly. (Though the proposed new rules regarding appraisals — and doing away with them for less-expensive properties — could help individuals purchasing through iBuyer programs, but I digress.)

“Tight inventory is a common challenge facing both individual and institutional single family rental investors across the country,” said Daren Blomquist, senior vice president with ATTOM Data Solutions. “Meanwhile the appetite for more SFR inventory continues to grow as a new wave of institutional capital builds. Industry innovators are rising to meet this challenge through a variety of inventory-inducing channels, including off-market, build-to-rent, and iBuyer initiatives.”

Actually, total market share of purchases from institutional investors have decreased over the years as foreclosures — a huge source of available inventory for these large-scale buyers — have dried up. In fact, purchases from institutional investors make up only 2.3 percent of all home sales in 2018 nationwide, which is down from 2.7 percent in the prior year and way down from 7.4 percent in 2012. So who are the institutional investors buying up all of these properties through iBuyer programs? 

The top three institutional buying entities — CERBERUS SFR HOLDINGS LP, CSH PROPERTY ONE LLC, and TAH HOLDING LP — all appear to be related to companies purchasing single family homes as rentals.

“There are a lot of buyers, both big and small, looking to grow their SFR portfolios and inventory is very tight. This is leading to creative ways to find new product — from build-to-rent programs, off-market inventory programs and iBuyer initiatives,” said Kevin Ortner, CEO with Renters Warehouse, a company that manages more than 22,000 SFR properties in 42 states. “There are several firms positioning themselves to be able to help bring supply to meet the demands of investors, and I expect that will continue to grow. I’m also seeing investment in technology and data across the space allowing greater scale, efficiencies and insights.”

It could also be that these institutional investors are seeing the winds of change in their sales and are building up their inventory of single-family rentals as the market begins to slow down, though it is far from grinding to a halt — or even sputtering, for that matter.


Joanna England

If Executive Editor Joanna England could house hunt forever, she absolutely would. Instead she covers the North Texas housing market and the economy for While she started out with the Real Estate Center at Texas A&M University, Joanna's work has appeared in The Dallas Morning News as well as several local media outlets. When she's not knitting or hooping, or enjoying White Rock Lake, she's behind the lens of her camera. She lives in East Dallas with her husband, son, and their furry and feathered menagerie.

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