This CEO is a pioneer of institutional homebuying—here’s what he says these giants are doing right now

Are you a real estate investor? Do you own rental property? 🏠

If so, you’re invited to participate in the Flock Homes-ResiClub Real Estate Investor Survey.

The survey results will be published later this month in ResiClub—and in other mainstream media publications.

Prior to founding Roofstock, Gary Beasley was the CEO of Waypoint Homes. Founded in 2009, Waypoint Homes was one of the early institutional housing investors that seized the opportunity presented by the 2008 housing market crash, acquiring distressed single-family properties at significantly reduced prices. In 2012, the Wall Street Journal reported that Waypoint Homes was the first institutional group to own over 1,000 single-family rentals. However, while institutional investors were beginning to realize there was upside in the space, the process was far from sophisticated.

Betting that single-family rentals would attract the attention of more investors over time, Beasley left Waypoint (which was rolled up into Starwood and then later into institutional landlord giant Invitation Homes) to co-founded Roofstock in 2015 to help big investors acquire and sell single-family rentals. His timing was perfect. During the Pandemic Housing Boom, a period marked by ultralow rates and cash-flush capital markets, record amounts of institutional capital poured into the housing market, including build-to-rent homes. And many housing investors began using Roofstock to expand their portfolios. After the pandemic hit, business really took off.

"In January 2021, we might have bought $10 million worth of homes for investors, and by the end of the second quarter of 2021, we were buying $250 million worth of homes per month," Beasley recently told ResiClub. "That is how quickly it ramped.”

But in early 2022, the housing market began shifting again. The Federal Reserve entered into the fastest interest rate-hiking cycle in over four decades, causing the average 30-year fixed mortgage rate to jump from about 3% to 7% in 2022. The Pandemic Housing Boom quickly fizzled out.

"The start of 2022 was strong, but as interest rates began to go up the [institutional home] buying really dipped," says Beasley. After mortgage rates spiked, Beasley shifted some of his focus from helping Roofstock clients acquire homes to offering services to help them manage the properties efficiently.

Beasley explained it like this: "When you're buying homes that quickly—we were helping investors buy close to 1,000 homes per month, renovating them, leasing them up—it's a big operational lift, and so when you're not buying at that clip you can really focus on nickels and dimes and the operation."

Click here to view an interactive version of the map below

At the peak of the Pandemic Housing Boom, institutional landlords—those with least 1,000 homes in their portfolio—made up 2.4% of home purchases in Q2 2022, according to John Burns Research and Consulting. And while that has since decelerated to 0.4% of transactions in Q1 2024, Beasley expects that over time, as the rate shock passes, more institutional capital will pour into the housing market, including the build-to-rent space where financial institutions buy directly from homebuilders and developers. In the years ahead, Beasley expects institutions will buy hundreds of thousands, if not millions, of single-family homes.

"It's the most liquid real estate asset out there. If you have these homes and have to sell them, you can always sell them to homeowners—there's always a price they will trade at. If you have an office building for sale, there may be no bidder," Beasley says.

Click here to view an interactive version of the map below

Given that mom-and-pops are still the kingpins of the single-family rental market, Roofstock is also keen on offering more services to them too.

Earlier this year, Roofstock merged with Mynd, which helps investors find, buy, lease, manage, and sell residential investment properties. Following that deal, Roofstock now manages close to 20,000 homes, with roughly 45% being owned by mom-and-pop investors, and the rest being institutional firms.

On Friday, November 8th, in New York City, ResiClub will host ResiDay, bringing together the brightest minds in the housing market.

Roofstock CEO Gary Beasley will be among our ResiDay speakers. We’ll ask him…

Where does the U.S. housing market head from here?

Where does he see the single-family rental sector heading from here?

How calls for regulation could impact institutional investors?

[ResiClub PRO members, our paid tier, can attend ResiDay for free]

Unemployment rate, by state 👇

Click here to view an interactive of the map below

Some of the information above is from an article I wrote for Inc in August.