How does an SFR warehouse line work for aggregators?

SFR warehouse line mechanics for portfolio aggregators

Use case: SFR portfolio aggregation requires per-home acquisition financing during the portfolio build. Warehouse lines provide revolving capacity that funds individual home purchases as identified, then roll the aggregated portfolio into permanent execution at a defined scale milestone.

Per-home advance: lender funds typically 70-80% of per-home acquisition cost (purchase price plus closing costs). Sponsor funds the equity portion and any rehab. Warehouse capacity is typically a defined dollar facility (e.g., $50M-$500M) with per-home draws within the facility.

Underwriting per home: lender pre-approves home types, geographic markets, and price-per-home tiers. Each individual home draw is then approved against the pre-approved profile, often with light per-home review (BPO valuation, basic title and inspection).

Tenor and rolldown: warehouse tenor typically 24-36 months. The expectation is that the aggregated portfolio rolls into permanent execution (bank pool loan, debt fund pool loan, or securitization) at a defined scale milestone, typically 500-1000 homes. Warehouse line is then paid down by the perm execution.

Sponsor playbook: warehouse lines are typically extended by specialty SFR lenders, debt funds, and some banks. Sponsor's track record of completing portfolio aggregation and rolling to perm is the primary credit factor. Permanent-takeout planning starts at warehouse origination.