Flock is a real estate technology company launched in 2021 and offers retirement solutions for landlords. The company helps owners keep the various benefits of real estate ownership without any problems by providing them with a seamless way to own shares within a managed portfolio of houses passively. Generally speaking, only institutions are typically part of a real estate investment trust (REIT), which consists of companies that own or finance income-producing real estate throughout many property sectors. That was, however, until Flock Homes began to provide landlords with a similar way of owning shares by using a portfolio made up of multiple properties. As of March 2022, it’s raised more than $26 million toward its efforts.
The financing was led by Andreessen Horowitz, including participation from Roofstock co-founder and chairman Gregor Watson and 1Sharpe Ventures. Also on board were Susa Ventures with Human Capital, Primary Venture Partners, and BoxGroup. With a ton of cash ushering in this new program, the signs for success were powerful, but how does it look now? Is being a landlord going out of style? Is Flock safe? What kinds of advantages and disadvantages are there with Flock? Is there an opportunity in there for me? I’ll do my best to dive into all these questions and help you understand Flock and everything behind it. Without further ado, let’s get into it.
Is it safe
Yes, Flock is virtually safe to use. You can check out a few platform reviews here, but I’ll save you the trip and tell you precisely what you’ll find. According to Trust Pilot, they have a 4.6 out of 5 rating, which would indicate that they are, in fact, safe. While they don’t have many reviews, that is simply due to the company being new. At the time of this article, they have 18 positive reviews 18. The link I provided above will reflect that information or be an updated number depending on when you check it.
Evolution of real estate
Chances are you’re a landlord or considering becoming a landlord, which is most likely why you’re reading this article. Or perhaps you’re just like me and enjoy looking into promising ventures, just in case you come across the right one for you. I mentioned in an earlier article how important I think it is for someone to be “right” for the investment they want to make. If you’re a landlord, especially if you have multiple properties, Flock is a platform you will want to look into. Is the “old way” of being a landlord going out of style? Perhaps, but not using this service won’t necessarily be bad for you; it may slow you down, especially if you have multiple properties. So, while it may not be pressing for you to jump on board right now, more and more users will “flock” to the program (see what I did there?). I base this assumption strictly on the ease and simplicity of use of the platform, as well as the excellent reviews that it currently has. Is Flock the evolution of real estate? At this time, I would have to think so. Do you have to evolve? That depends on your situation.
Is Flock a good investment for me
Millions of Americans currently own rental properties, and Flock focuses on the accidental landlord and the retiring landlord but can work for any landlord. They seamlessly convert rental properties into a share of houses and offer owners a way to switch from active to passive ownership. Some of the other perks associated with Flock are avoiding capital gains taxes, maintaining income, and diversifying real estate holdings. One of the founders said that the model is designed for people who find “owning a hassle, but selling costly.”
In exchange for a lower rent, there are potential tenants out there who are willing to live with 1980s decor and outdated floorplans, but at the same time, it isn’t a matter of choice. Having a wider variety of houses allows for a more diverse mix of households. If this sounds like problems or situations you have or are currently finding yourself in, you should seriously check this company out.
Potential downsides to Flock
You may be thinking that I seem pretty optimistic about this platform, and that’s because I am. I’m positive it’s a safe organization to work with that has created much success for many people. Is it great for you? That depends on your situation. Are there downsides? Of course, there are downsides to many things, especially if you look hard enough. However, in the case of Flock, you don’t have to dig too deep to find the first set of issues.
The company charges a management fee of 1% of assets, and in the grand scheme of things, that tends to be on the high side for a REIT. That said, that price isn’t outlandish for an individual who typically pays fees for active management of their equity portfolio. Even though it’s a bit high, consider the active or passive investor who has invested more mainstream through their financial institution while only expecting a conservative return.
Some long-time landlords don’t see the services that Flock provides as anything too revolutionary. This could be because they have much experience in the game; in that case, their way of doing things may work best for them. For instance, you wouldn’t have to worry about the fees I just mentioned if you weren’t using Flock, which is enough to turn off many long-timers. They may see it as an unnecessary expense for a service they don’t wouldn’t benefit much from.
Another question on landlords’ minds is; what does joining Flock Homes cost them in terms of the monthly income they can receive? If fewer landlords sell, there will be fewer options available for renters looking to become homeowners. It’s that simple. However, this does depend on several things, such as the value of the individual property, how the overall portfolio performs, and the efficiency of managing multiple properties. This information provides scale and reduces costs; in turn, the savings are passed on to the owners. Vacancy risks are also severely reduced across a broader range of homes.
So, is Flock right for you? Well, that would depend on a few things, like are you in a situation where Flock can be helpful to you? And if so, are you ready to retire from being a landlord? Flock Homes is a promising new company that makes that possible while allowing you to continue reaping the benefits of possessing an investment property. I don’t do much investing in real estate, but I do conduct much research, and everything I’ve come across regarding Flock Homes is on the up and up. As mentioned, Flock is perfect for accidental landlords, and this demographic will see the most success. So yes, it’s a viable option worth looking into for any landlord, but if you fit into their demographic, this program is tailored to you.