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Flock Homes - 721 Exchange
Has anyone had any experience with this company? Curious to know how it's going and if it's a good alternative to selling my properties or trying to do a 1031 down the road.
I have the same question. I have tried to do my due diligence on the company and founders and it appears to be legitimate - but I could be missing some things. Their concept is excellent and they have some successful venture capital backers. My concern is the markets they're choosing to purchase into at the moment. I don't understand enough about it to know if them stocking up on single-family and small multi-family properties in the Denver area, at the current prices, is a good initial play that will hold up. I really want to go with them, but it would be fairly easy to con me.
I don't have any experience either. I did look into them though a bit and I came to the conclusion that I would rather just do a 1031 into a Delaware statutory trust (DST). I think a DST might afford more investment options and flexibility. For example, if you want to get back into Real estate with the flock funds you can't. You can't 1031 from flock into another like kind investment. It does seem though that one of their value add services is an easy sale into the flock. That could be appealing to some investors who just want out quickly and easily.
This is an interesting opportunity to exchange the value of your property for REIT shares. I'm curious, do they care how leveraged you are? My company does financial analysis and research on REITs. I'm not familiar with Flock. I'll check it out. Thanks for sharing!
@Ian K. - We also have research on every publically available DST. There are some really good programs, but some landmines out there as well. I like the idea of investing into a program that preserves 1031 options on the back-end. Once you 721, that's the last tax-deferred transaction that you'll do. It's generally a useful tool for an investor who is estate planning and has a step-up in basis event on the horizon and can liquidate out of the REIT easier than out of the traditionally held property.
Quote from @Angela P.:
Has anyone had any experience with this company? Curious to know how it's going and if it's a good alternative to selling my properties or trying to do a 1031 down the road.
I work for them! Happy to answer any questions you have. Our portfolio has grown to 108+ homes across 4 markets totaling more than $40M in assets managed. We announced the closure of our Series A last week, securing $26M ($33M to date) in funding from a top venture capital firm Andreesen Horowitz. Also, Business Insider published a nice article last week that shows the Flock process from the perspective of a client. Let me know if you would like to connect!
Quote from @Janet Runes:
I have the same question. I have tried to do my due diligence on the company and founders and it appears to be legitimate - but I could be missing some things. Their concept is excellent and they have some successful venture capital backers. My concern is the markets they're choosing to purchase into at the moment. I don't understand enough about it to know if them stocking up on single-family and small multi-family properties in the Denver area, at the current prices, is a good initial play that will hold up. I really want to go with them, but it would be fairly easy to con me.
Hi Janet! I work for Flock and happy to answer any questions you have. Our portfolio has grown to 108+ homes across 4 markets totaling more than $40M in assets managed.
Quote from @Jon Taylor:
This is an interesting opportunity to exchange the value of your property for REIT shares. I'm curious, do they care how leveraged you are? My company does financial analysis and research on REITs. I'm not familiar with Flock. I'll check it out. Thanks for sharing!
@Ian K. - We also have research on every publically available DST. There are some really good programs, but some landmines out there as well. I like the idea of investing into a program that preserves 1031 options on the back-end. Once you 721, that's the last tax-deferred transaction that you'll do. It's generally a useful tool for an investor who is estate planning and has a step-up in basis event on the horizon and can liquidate out of the REIT easier than out of the traditionally held property.
Hi Jon, My name is Ford and I work for Flock. We don't care how leveraged you are! Please let me know if you would like to discuss what we are doing further!
I’d be interested to connect with you!
DM me and I’ll share my contact info
I was curious if anyone had signed up with Flock and had additional insights.
Me too!
Seems like Zillow tried the same thing and failed. https://www.wsj.com/podcasts/t... Wondering how they are able to do it!?!
IIRC, Zillow was just flipping homes similar to opendoor and other ibuyers.
While Flock is actually implementing the IRS 721 section directly
- Exchange your rental property into a (UP)REIT .
This bypasses the whole DST to REIT transition since Flock purchases the property and puts it in their one REIT. I am guessing they can of course sell it off subsequently if it underperforms.
The proof of the pudding is in their sustained payouts and capital appreciation. Not much history as of now.
I contributed a home recently (May 2022).
Overall process was relatively smooth. Although there were a few miscommunications internally at Flock which I had to clarify/follow up on to rectify.
The home I contributed is a San Antonio SFR that I'd rented out since purchasing it brand new back in 2005. Remaining principle on the mortgage was paid by Flock at closing ( ~60K), so my shares at Flock represent the equity in the home that I'd accumulated from appreciation and principal repayment over the last 17 yrs.
I like their approach/strategy. Hopefully a) they meet/exceed my expectations over time and b) more auditable info/data comes into existence based on the experience of Flock shareholders, in contrast to the rather limited info/data that exists today.
#1 Market Trends & Data Contributor
I talk to their CEO. They're very straightforward. It's an 721 UPREIT with SF as underlying assets, usually, a 721 is CRE.
From long time ago i wondered why anyone never did something like this. It's DST --> 721. Quit transparent on everything.If you understand DST and UPREIT route, this is not difficult to understand.
I think a good thing about this company is how they value each home using automated software which is very very very objective in my view.
#1 Market Trends & Data Contributor
Quote from @Nuatu Tseggai:
I contributed a home recently (May 2022).
Overall process was relatively smooth. Although there were a few miscommunications internally at Flock which I had to clarify/follow up on to rectify.
The home I contributed is a San Antonio SFR that I'd rented out since purchasing it brand new back in 2005. Remaining principle on the mortgage was paid by Flock at closing ( ~60K), so my shares at Flock represent the equity in the home that I'd accumulated from appreciation and principal repayment over the last 17 yrs.
I like their approach/strategy. Hopefully a) they meet/exceed my expectations over time and b) more auditable info/data comes into existence based on the experience of Flock shareholders, in contrast to the rather limited info/data that exists today.
In my opinion, the Flock success has nothing to do with their performance but with the general overall US real estate economy. Their targeted CoC is only 3% which is pretty much it for Class A/B property in Denver,CO. The Flock only operates portfolio of SFR. They are not Multifamily and can't be expected to be the same with MF syndication as such. This is similar to other DST that work with CRE assets.
Meanwhile, your equity appreciation (or losing) is entirely determined by each house valuation using software --which is objective -- minus 1% "annual management fee". They operated very similarly like a REIT or property management. If the CO market is doing well for sure investors doing well too, if not, your equity may be decreasing as well.
This is a very fair game I could say, I meant to say in the real world they're just "property management"/REIT that doesn't necessarily have to perform to buy/sell the property to increase NAV. If we're into the 10-year bear market then you may lose your money too when you have to sell your shares/equity.
Hi, revisiting this Flock Homes forum, does anyone have experience or reviews of performance with them? Thanks,
#1 Market Trends & Data Contributor
Quote from @Andrew R.:
Hi, revisiting this Flock Homes forum, does anyone have experience or reviews of performance with them? Thanks,
Their performance would be more or similar like homes in Denver or GA. I suggest you talk to their CEO, he's very approachable.
Has anyone on this forum worked directly with them on a 721 exchange?
I'd love to see their REIT financials to compare against the other public REITs that have a 721 program.
#1 Market Trends & Data Contributor
Quote from @Jon Taylor:
Has anyone on this forum worked directly with them on a 721 exchange?
I'd love to see their REIT financials to compare against the other public REITs that have a 721 program.
Their fee is way less than 721's commercial Jon and they are the only 721 with SF as asset class, other 721's are CRE based as you may already now.
Having said that, their NAV would be better than 721's commercials..... in theory ;-) the annual fee is also 1% less than CRE.
Quote from @Carlos Ptriawan:
Quote from @Jon Taylor:
Has anyone on this forum worked directly with them on a 721 exchange?
I'd love to see their REIT financials to compare against the other public REITs that have a 721 program.
Their fee is way less than 721's commercial Jon and they are the only 721 with SF as asset class, other 721's are CRE based as you may already now.
Having said that, their NAV would be better than 721's commercials..... in theory ;-) the annual fee is also 1% less than CRE.
Do you have their Q4 statement? Can you DM me?
#1 Market Trends & Data Contributor
Quote from @Jon Taylor:
Quote from @Carlos Ptriawan:
Quote from @Jon Taylor:
Has anyone on this forum worked directly with them on a 721 exchange?
I'd love to see their REIT financials to compare against the other public REITs that have a 721 program.
Their fee is way less than 721's commercial Jon and they are the only 721 with SF as asset class, other 721's are CRE based as you may already now.
Having said that, their NAV would be better than 721's commercials..... in theory ;-) the annual fee is also 1% less than CRE.Do you have their Q4 statement? Can you DM me?
Just email the CEO
Flock Homes is a joke.
Do you really want a paltry 3% dividend while losing many of the tax advantages you have with actually owning the property yourself?
Do you want to pay a 6% "on-boarding" fee on the front end? (That means it would take you two years just to break even!)
Do you want to lose your options to do a 1031 exchange on your properties?
Do you want to pay a 1% yearly management fee? Just imagine if you had a property manager charging that much on a 400k house - that would be nearly $350 per month!
#1 Market Trends & Data Contributor
Quote from @Chuck E.:
Flock Homes is a joke.
Do you really want a paltry 3% dividend while losing many of the tax advantages you have with actually owning the property yourself?
Do you want to pay a 6% "on-boarding" fee on the front end? (That means it would take you two years just to break even!)
Do you want to lose your options to do a 1031 exchange on your properties?
Do you want to pay a 1% yearly management fee? Just imagine if you had a property manager charging that much on a 400k house - that would be nearly $350 per month!
well that's why it' called 721 LOL LOL
#1 Market Trends & Data Contributor
other 721 may have even higher annual maint. fee and dividend 3% is about the right one for cap rate 3-4%.
@Nuatu Tseggai - Curious to know how your flock shares have been performing over the past 2 years and what the current dividend rate is ? Would you be willing to share here ? Thanks !
@Carlos Ptriawan hey, any updates on how your 721 is performing?
Thanks
I decided to try Flock Homes and sold a rental property to them earlier in 2024. So far I have gotten the quarterly cash flow as expected, the fund value is kind of plateau'd in 2024 so have not seen major gains or loses in the fund. I found the process to be legit and transparent as far as them viewing and making an offer on my property. They are pretty involved in making sure the property is updated and functional which ends up reducing the amount of $ offered, or if the property needs maintenance repairs Flock might not offer on it at all. Which is probably a good sign. There are some onboarding fees which start to get steep once you add up all the other transaction expenses and the 1% annual fee, but I would hope the onboarding could go down or be a flat fee rather than a %. I decided to give it a try and it is quite nice not to worry about utilities and tenant issues. My cash flow is less than when I owned the rental, but my expenses are less too. Long term I'll have to see how the fund does in gaining value. The staff are super responsive and helpful.