Flock Celebrates 5 Years, USA 250, With 1776 Homes

A Letter from Founder & CEO of Flock Homes, Ari Rubin

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We started Flock five years ago with five homes in Colorado. I named the business Flock, inspired by the idea that joining people together in a Partnership would be a better way to own real estate.

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After the first few conversations with prospective owners, I quickly realized that the quickest hook to get people interested in the Exchange was slightly different than I originally anticipated. As one client, a 71-year old retired fighter pilot from Austin recently described it, the idea is to "to take old farts like me who own homes and have managed them for a while and bring us into a partnership without triggering taxes." Yes, scale and diversification mattered, but capital gains and depreciation recapture were the largest reason people continued to hold onto their real estate well past the time they want to be landlords. So it is only fitting that we would celebrate 5 years of Flock, and 250 years of this country, by surpassing 1776 homes — the United States was also founded by a group of people who joined together with a private market solution to an inefficient tax regime!

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But as time went on, and our relationships with prospective and current clients expanded, we observed that affinity owners feel towards the Flock Partnership is much more than a tax strategy. After all, there are a myriad of other tax mitigation strategies that individuals rely on (tax loss harvesting, 1031 Exchanges, CRTs, the list goes on). For Jim and Pam, a couple who cared deeply about their tenants, it was wanting to spend more time away from home but not wanting to kick out their tenants to sell each home on the market. For Rick, it was preserving his sole income stream into retirement that he relied on to supplement Social Security. For Gus and his family, it was about bringing homes that he had owned for 40+ years back online and making them rentable. Our original hypothesis in starting Flock was correct.

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Housing is back as one of the biggest issues in national discourse. The coming days will likely see landmark legislation signed by the President that has lofty goals of bringing down costs and boosting supply by cutting red tape and banning Wall Street investors. I commend the bipartisan efforts by Congress to pass a bill, but I am skeptical it's going to have a meaningful impact on affordability. There are still thousands of state, county, and local regulations that must ease up. The cost of labor and materials are too high to build our way out of this problem. And then, of course, there is the tax code.

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But even if all of that fell into place — the red tape was cleared, and the homes got built — it still wouldn't solve the part that motivated us to build Flock in the first place. Because the reasons Jim and Pam, or Rick, or Gus held onto their homes weren't red tape or supply, they were personal. Legislation can’t help an owner figure out how to let go of one. That's the people side of housing, and no regulation is going to solve it.

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That's the part we started Flock to solve, and it's the part I'm most optimistic about. The oldest solution to the hardest problems is also the simplest one: people joining together, with shared incentives, in Partnership. It's how a group of tax-trapped colonists once built a country and how tens of millions of underutilized homes will find their way back into their highest and best use. 

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We started with five homes. 1776 is a milestone for many reasons, but we're just getting started!