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Single-family rentals, collectively, is now officially an asset class of real estate investment, and the $100 million funding of Avenue One, a technology company born to support it, is another example of the category’s evolving presence on Wall Street.
Leading the round is WestCap, with participation from MetLife Investment Management and “other leading investors,” according to an announcement sent to Inman.
Avenue One describes itself as a marketplace for institutional owners, buyers and sellers of residential homes. Funding will be positioned to continually improve the company’s software, expand its local partner network and support the growth of its institutional marketplace, the announcement reads.
“Today we stand on the shoulders of these world-class investors who have committed to supporting our work with local real estate businesses across the country,” said Ryan Stroker, co-founder and CEO of Avenue One, about the substantial raise. “Local partners are the bedrock of our thriving ecosystem fueled by efficient access to the capital markets.”
The company was founded in 2021 focusing on mid-tier market homes that often require renovation, for which Avenue One hires local vendors to facilitate. Its website states the company invests an average of $30,000 in each home. It also hires local property management companies within the 21 markets it is active.
Avenue One’s purchasing arm claims to underwrite homes in 90 seconds.
“In addition to its tech-driven service platform, Avenue One also offers a marketplace of services to buyers, owners, and sellers of residential real estate by offering a robust, independent marketplace and not buying for its own balance sheet,” the company stated.
Rent prices continue to decline, but so does the prospect of homeownership for tens of millions of Americans. Low sale inventory and thus climbing home prices combined with a significant portion of owners not open to abandoning sub-4 percent 30-year fixed mortgages, are making today’s housing marketing exceptionally challenging for buyers and hard to define for the people who work in the industry.
The single-family rental is growing, and build-to-rent communities are popping up, and so to are technology companies and vendors, like Avenue One, to support it.
William Martiner, co-founder and chief technology officer of Avenue One, said in the announcement that the process for identifying suitable investment properties and making them market ready is widely fragmented, a challenge its technology is solving.
“We bring the transformative effects of new technologies to a previously disjointed and complex asset class,” Martiner said. “The service platform we built is well matched to the challenges of investing in far-flung residential rental properties.“
According to Hunter Housing Economics, the build-to-rent market will continue to climb well toward 2030. The market analysis and consulting firm found that the market is on pace to add 130,000 units this year.
“Activity is expected to continue to gain momentum in 2024 and 2025, as more homebuilders pivot toward building homes with the intent of selling to an operator, hitting close to 150,000 units built for rent in 2024, heading toward 160,000 per year and continuing to rise,” the company stated.
