📉 Game of Tariffs, Institutional Buying Bust, and Bloom

Game of Tariffs May Offer Opportunities for Real Estate Investors

Tariffs, a term that seldom enters the discourse of real estate investors, are now poised to become a pivotal factor in the market. Historically, the United States relied heavily on tariffs as a primary source of government revenue, accounting for between 50% to 90% of federal income from 1798 to 1913. However, with the introduction of income taxes in 1913 and the nation's more recent shift from a manufacturing-based economy to a service-oriented one, the reliance on tariffs diminished significantly.​

Following three years of accommodative monetary policy, succeeded by aggressive tightening, and coupled with a constricted labor market, the nation stands at a crossroads. The question is: How to reduce government debt to avert financial catastrophe while deflating a massive, artificially inflated bubble that has disproportionately benefited only half the population?​

Will tariffs finally shift the balance of the housing market from sellers to buyers? Perhaps. 

Tax on Consumption

At their core, tariffs are consumption taxes. Instead of the government dipping into your paycheck, it's now eyeing your shopping cart. This administration touts tariffs as instruments of fair trade, but let's not kid ourselves, achieving equitable trade with nations like Vietnam is a pipe dream. We exploit their low labor costs to churn out products like Nike sneakers and Lululemon yoga pants, remaining steadfast net importers. The fantasy that lifting tariffs on U.S. goods will suddenly balance trade scales is delusional.​

However, tariffs do have a knack for throttling consumption. They force Americans to pause and ponder: Do I need this, or is it just retail therapy? This enforced frugality — two-thirds of the U.S. economy relies on personal consumption — can send shockwaves through the market, prompting investors to flee to the safest harbors.​

The Smoot-Hawley Tariff Act of 1930 was aimed at shielding American farmers and manufacturers, but instead provoked international retaliation, leading to a significant contraction in global trade and exacerbating the Great Depression.    

In What World Does This Make Sense…

Consider the 10-year U.S. Treasury yield, a critical indicator influencing financing for significant projects like businesses and housing. It has dropped from around 4.3% to below 4% in mere days. While this hints at recession jitters, it also signals a mass exodus to safer assets.​

Hypothetically, if the motivation for imposing tariffs isn't solely to rebalance global trade fairness but to exert maximum pressure on the long end of the yield curve for a specific period, it could be a strategic maneuver. This approach could influence the Federal Reserve's decisions. With Scott Bessent as treasury secretary, a Democrat with an unparalleled track record in macro investing, there's a level of expertise that suggests this isn't merely a whimsical endeavor driven by President Trump’s longstanding desires to enact tariffs.​

What’s Next?

Some anticipate that this strategy will compel Federal Reserve Chair Jerome Powell to cut benchmark interest rates to preempt a full-blown engineered recession. Such cuts would directly impact the short end of the yield curve. In this scenario, tariffs influence the long end, Fed cuts affect the short end, and the government could potentially refinance its debt at rates 200 basis points lower, saving taxpayers trillions. 

Additionally, those on the lower half of the income spectrum who are most affected by higher short-term financing costs might finally get some relief. While the top 10% may see moderate deflation in housing values and stock portfolios in the short term, they would still fare better than they did before, during the period of easy money that largely benefitted asset owners.​​

In a best-case scenario, the administration could announce deals that remove tariffs, leading to a slight uptick in rates but effectively having forced them lower. Equities will rebound over time, though some sectors could bear the brunt of the process.​

There's a myriad of reasons why this strategy might not succeed, making it a delicate balancing act. If tariffs remain as proposed, certain businesses could come to a standstill. Others might be forced to implement widespread layoffs, upending what has otherwise been a strong labor market. A significant recession could negate efforts to cut and refinance government debt, as historically, the government resorts to increased spending to navigate economic downturns. This could lead to widespread financial distress, including loss of homes, vehicles, and strained personal relationships, as seen in previous recessions. 

It's a perilous game of economic Jenga. Pull it off, and the administration etches its name in the annals of fiscal wizardry. Botch it, and they're the architects of their own downfall.

Why This Matters for Real Estate Investors

Keep cash on hand and try to stay gainfully employed. By the end of the year, there could be opportunities in residential real estate for those who are prepared to act. Inventory may surge, creating the first true buyer's market in over a decade. Financing costs could drop by 150-200 basis points, lowering costs for investors. Factor in a potential 15% rent sensitivity, knowing rents remain pretty resilient in recessions,  and go on the offensive. Acquisition mode could finally be back on deck.

The Great Institutional Takeover of the SFR Market That Never Happened

Several years back the popular media trope was how corporate landlords were destroying the American dream of home ownership, jacking up rents on tenants, charging unreasonable fees and letting properties deteriorate.

Sure, plenty of small landlords don’t do such a great job of keeping up their property, but that was not news for national publications.

But the reality is that when interest rates started to rise in mid-2022 and peaked at near 8 percent at the end of 2023, the institutions started to lose interest. They look elsewhere to chase yield, partly because buying homes no longer penciled for them and probably because many learned the lesson that managing scattered site housing is a nightmare.

Most investors look like you and me, smaller property owners who realized the leverage available to buyers, the tax advantages, the chance to build equity over time, and the hedge against inflation and wild market swings (hello Trump tariffs!) make real estate an excellent vehicle for building wealth. 

According to a report from Realtor.com, small investors — those who bought 10 or fewer homes since 2001 — made up 62.6% of purchases from January to March 2024, their highest share since the company started collecting that data in 2001. Small investors also bought up 6.4% more homes in the first quarter of 2023, while medium- (11 to 50 homes) and large-investor (50-plus homes) purchases fell by 3.8% and almost 14%.

In fact, some institutions were trimming inventory in the past year. A letter in March from the Real Estate Roundtable and Nareit, the representative for real estate investment trusts, sent to the Federal Trade Commission said: “Three of the largest institutional owners were actually net sellers of existing single-family homes in 2024.” (Bold is ours.)

The estimates from John Burns Research and Consulting over the last year reinforce the trend. Institutional investors made only 0.3 percent of the $2 trillion of single-family home purchases from March 2024-25. Activity by corporate buyers declined by 90 percent in the last two years.  

The housing market is notoriously inefficient, and driven by local forces. Proptext put together its own top ten market list earlier this year, places where most institutions would never bother to look. We know that the work that goes into finding the deal is probably the most important part of the process, and these days the competition from institutions is not as rigorous.

A Buying Spree That Interest Rates Snuffed Out

Like a lot of stereotypes, some of the stories about rapacious corporate landlords were true, certainly as true as the stories about mom-and-pop landlords who neglect their properties. The institutional machine is certainly more efficient at assessing fees and starting eviction proceedings than your average small-time property holder.

Also, corporations made a convenient scapegoat for the housing shortage and affordability issues, though the roots of the shortage were planted during housing bust of 2008-09 and the dearth of construction during the 2010s.

But the anecdotes about corporate landlord misbehavior in the early part of this decade were particularly shrill:

• “A $60 Billion Housing Grab by Wall Street” Hundreds of thousands of single-family homes are now in the hands of giant companies — squeezing renters for revenue and putting the American dream even further out of reach, from The New York Times Magazine in March of 2020.

• “When Wall Street Is Your Landlord” With help from the federal government, institutional investors became major players in the rental market. They promised to return profits to their investors and convenience to their tenants. Investors are happy. Tenants are not, which appeared in Atlantic magazine in February of 2019.

• First Time Homebuyers Squeezed Out by Investor, which NPR published in February of 2022.

Institutions started to pull back on their buying as interest rates rose, and the media bogeyman of the evil Wall Street landlord went back into his cave. 

Institutional investors owned some 3.8% of single-family rental (SFR) homes across the country as of June 2023, according to a report from the Urban Land Institute. Some cities, such as Charlotte, Jacksonville, and Atlanta, were seeing corporations own as much as 10-13% of the rental properties in certain zip codes and the buying spree in the early 2020s fed the media machine lamenting how regular folks were being crowded out. 

There was talk that institutions would start to ramp up its buying so it owned a greater chunk of SFRs, the way it did decades ago with multifamily, where 55% is in institutional hands.

That does not seem to be happening.

Recent research from the Brookings Institution and the Urban Institute confirmed that large institutional investors still own only about 3 percent of single-family rental homes, and that percentage falls to about 1.5 percent if townhomes, duplexes and apartments are included. 

Story of One Proptech Shooting Star

Back in June of 2021, Invesco, a management firm with $1.8 trillion under management, led a $40 million funding round for the proptech company Mynd and pledged $5 billion for the purchase of 2some 0,000 single-family homes. Heady days indeed, and Mynd was valued at some $800 million despite not having much more than a tech platform and about 13,000 homes under management. 

When Invesco sent another $30 million Mynd’s way in 2023 to expand the institutional investment business, it felt like a bit of a Hail Mary. There was no mention of $5 billion for buying SFRs. Macro economics, in the form of mortgage interest rates hovering around 7%, crashed the party.

When Mynd “merged with its competitor Roofstock in May of last year, one of early leaders in the proptech bubble had come back to earth. 

In a proptext post from May of 2024, an ex-Mynder and current proptexter answered this important question:

Does retail real estate investment management scale? For me, the answer is no. The level of service required at the individual level for personal assets is too noisy for nationwide operators. It’s better to build your own team.

So there you have it. Go build your own team, even if it is a team of one.

California, Maryland

Located in St. Mary's County, this community offers a blend of economic stability, favorable housing metrics, and proximity to significant employment hubs. California is strategically located near several major employers, including those associated with the Patuxent River Naval Air Station (Pax River NAS). This military base is a significant economic driver in the region, supporting thousands of jobs in defense contracting, aviation technology, and related fields.

The median property value was $337,900, reflecting a 5.83% increase from 2024. The state’s focus on advanced technology sectors like artificial intelligence and semiconductors could directly and indirectly benefit California, MD through spillover effects from nearby urban centers.

• According to Zillow, the average rent for a single family home is $2,800 

• Only 1.5 hours away from Downtown DC

• It has a median household income of $91,034, higher than the national median

• Mixed-use developments: Projects like Lexington Exchange create opportunities for diverse investments across retail, office, and residential sectors.

• This military installation is home to the US Navy's Naval Air Systems Command (NAVAIR) and the Naval Air Warfare Center Aircraft Division, employing approximately 11,915 

• Other aerospace companies and defense contractors are also in the area. 

California offers good value, with reasonable home prices and a strong rental market. The median sale price was $337,900, significantly lower than the median home price across the US at $419,200. The area’s median household income of $91,034 is more than $10,000 higher than the nationwide median of $80,610, as of 2023. 

This is a region that offers excellent opportunities for single-family residential investors. 

1030 Side Saddle Trl

Located in the water-oriented community of Chesapeake Ranch Estates, 1030 Side Saddle Trail offers residents access to private, resident-only beaches. This Cape Cod-style home, built in 1993, features 3 bedrooms and 2 full bathrooms across 1,346 square feet of living space. The property includes a deck and a shed, providing additional outdoor living and storage options. Conveniently situated near PAX NAS, as well as the amenities of Lusby, Solomons Island, and Lexington Park, this home presents a valuable opportunity for those looking to invest or personalize a residence in a desirable location

The Investment Thesis

→ 3 bedroom home for only $299,999
→ $2,334 / month estimated rent
→ Undervalued home in an undervalued market.

 Property Details

 Financial Projections

Interested in Learning More?

*Appreciation based on 4% growth rate. 

Native Vermonter Reflects on How Real Estate Helped Him Build a Comfortable Life

Mike Burke grew up in a family of 13 in Rutland, Vt., but lived a peripatetic life once he left home, with his work and travels taking him across the country and the world before he settled back in Rutland a few years ago. Now 81, Burke also lived in Washington, DC, did a one-year tour of duty in Vietnam, spent time in Israel and later bought homes in Los Angeles and the Bay Area.

All through his travels, he considered himself a student of real estate, checking on comps, tax rates, the quality of the schools wherever he was looking to buy. And buy he did, multiple homes and condos over the years, with only one deal — a condo in Piermont, NY — selling for less than what he bought it for.

“I made most of my wealth through real estate,” Burke said recently.

A career as a shipping executive took him first to California, then to Asia, and later to the East Coast. But his experiences before that prepared him for what life sent his way.

Burke went to the University of Vermont to play running back on the football team (the program was discontinued after the 1974 season) after he graduated from high school, then was drafted in 1966 and attended Officer Candidate School and received his commission as a combat engineer in 1967. A summer spent widening roads in Vermont helped prepare him for the work he did in Vietnam. 

Landing in country toward the end of the Tet Offensive in 1968, Burke was first charged with building firebases in the mountains around Khe Sanh in support of the US Marines pinned down by North Vietnamese artillery. Another mission was building an airfield in the A Shau Valley, the site of intense fighting, including the Battle of Hamburger Hill, an engagement that spurred controversy back home and among troops who fought there.

After the war, he went to work for Bank of America, which moved him to California and put him in charge of a branch in Fillmore. He left that job and moved to Israel and was working for the Exchange National Bank of Chicago. (He toyed with the idea of moving to a kibbutz, but his wife Micheline, a Moroccan woman whose family fled Spain during the Inquisition and whom he married in 1970, was none too keen on that idea.)

He returned to Los Angeles after a year and served as the business manager for a medical group in Beverly Hills.

“We bought our first house in San Fernando Valley for $32,000 and inflation was going crazy and interest rates were starting to go up,” he said. “We could just barely afford a down payment.”

He got a loan from the Veterans Administration at 8 percent, and then sold that house 18 months later for $52,000.

By 1975, he was working in the shipping industry and earning better money. He bought a house in Woodland Hills for $85,000, which he thought was worth $100,000, financed by a loan at 9%. When he was transferred by the company to the Bay Area three years later, the house sold for $149,000.

“I rolled that money into a new house in Alamo that we bought for $179,000,” Burke recalled. “In 1980 we rented it out and moved to Taiwan, came back 10 years later and we lived in it for another year.”

During that period in Asia, the house in Alamo, which is between Walnut Creek and Danville in the East Bay, was producing almost $1,900 a month in cash flow. 

“I got some good advice from some of the older guys at the shipping company,” Burke said. “They said: Don’t sell.”

He was transferred to New York and bought a house in the upscale suburb of Ridgewood, NJ, for $400,000 and put another $80,000 into it to update the kitchen and bathrooms. He was still renting the house in California, but he had some money to invest and he noticed that rents in New York were very high while apartment prices were reasonable.

“I had studied the market and we had looked at apartments and decided this was the time to sell California because we were not going to go back to California,” he said. The house in Alamo sold for $700,000 and found a condo near Gramercy Park with amenities that included a pool and a gym and did a 1031 Exchange to avoid capital gains.

“We bought it as an investment and possibly as a retirement home,” Burke said. “It was no problem getting $4,800 in rent, so we were getting about $2,000 in cash flow a month.”

The market was still in a slump from the 2008 crash when it came time to sell the house in Ridgewood in 2010, so it was down from its peak of $1.2 million. He then bought a condo in Piermont near where his wife Micheline had a job in Nyack. But when she had a stroke the following year, Burke decided to rent an apartment in the same building where one of his daughters lived in Battery Park City so they could be near their grandchildren.

Meanwhile, his other daughter was living in a cabin he had purchased and renovated in East Wallingford, Vermont some years before. When Covid hit, Burke decided to move back to Vermont so that he could save on the rent he was paying to live in New York City and spend time with that daughter’s family. 

These days he lives in a single-story home in Rutland, a house that was manageable after his wife was incapacitated by a second stroke. (She died in January.) He muses about moving back to New York, but revels in seeing the scads of family and friends who live nearby.

“I don’t know that I have another move in me,” Burke said.

This interview was edited and condensed for clarity.

What is your special real estate superpower?

Studying the market. I took a broker’s course in New Jersey in about 1992 or 93 because I had made money on real estate. I was working with agents and a lot of them don’t know what they are doing. I thought I’d do it (work as a real estate agent) part-time but after I did one open house I decided I didn’t want to do it. Still, it was valuable information to have. I always studied the markets when I was looking to buy, the taxes and the schools. I would go to a lot of open houses. 

What was the hardest lesson you learned early on in your real estate journey, and how did you overcome that and persevere?

If you are going to buy near water, be very careful. I knew a young couple in Vermont who bought a small farm and house on a river they had fallen in love with. They wanted to raise organic vegetables. Blinded by their dream, they ignored warnings about climate change. Tropical Storm Irene hit Vermont very hard (in 2011) and it washed out all of the good soil leaving it impossible to grow anything on the land. Consequently, their dream was shattered, and they lost the farm.  For me personally, Superstorm Sandy storm hit the Piermont area hard (in 2012) and we had some damage. We ended up losing some money on the condo we owned there when we sold it.

What advice would you offer to somebody looking to get into real estate or grow a portfolio?

Study the market. Getting a broker’s license is pretty easy, spend an hour a week for a month or so. (Requirements these days vary by state but can range from 20-120 hours of training. New requires 77 hours of coursework. California 135 hours, plus other steps.) The timing is really important and it’s important to be very truthful. Get everything in writing. Shop for a mortgage with mortgage brokers. You think that bankers need to be honest — when I was shopping for a refinance on the mortgage for the Ridgewood house and I had a banker tell me to sign here and I could get another half point off the rate if I said I was going to live in the house. I said I was not going to live in it and I was not going to lie.

Among the strategies a property owner could pursue — long-term rental, mid-term rental or short term, (Airbnb), co-living — what works best for you, and why?

I got spoiled by (the apartment building) Gramercy Place because the rentals were usually one or two years and they checked out the tenants for me. We had tenants for 10 years in Alamo (Calif.) and I never raised the rent and you could say I was losing money but I had tremendous peace of mind. It’s important to be fair with people because you can tell when people are trying to scam you.

Bloom

The relationship between property managers and residents is by nature transactional. Pay rent. Fix broken water heater. Unclog drain. Repeat. 

Bloom, a new SaaS platform launched by Roots, aims to transform this model into a partnership where everyone benefits. By integrating financial empowerment into the rental experience, Bloom promotes resident engagement, retention, and a thriving community built on shared wealth.

Founding Team

Roots, an Atlanta-based real estate investment company, is the force behind Bloom and the innovative “Live In It Like You Own It®” program. Larry Dorfman, co-founder of Roots, and Benjamin Turner, partner and co-founder of Bloom, are leading the charge to redefine renting through financial inclusivity.

Dorfman has made it his mission to help one million renting families build wealth through Roots. A serial entrepreneur, he sees Bloom as an extension of the Roots ecosystem, offering renters a chance to get a piece of the action.

Turner, inspired by the chance to realign incentives between property managers and residents, joined the mission to bring Bloom to life. “Providing residents with real upward mobility isn't just good for them, it’s good for business,” Turner explained.

How Bloom Works

Bloom is an SaaS platform that empowers property managers to turn residents into partners, enhancing engagement and retention. Bloom integrates Roots’ successful “Live In It Like You Own It®” program to create a tenant-focused experience that offers a chance to build wealth.

By enrolling their properties with Bloom, property managers give residents access to equity-like rewards, encouraging proactive maintenance, timely payments, and positive community engagement. Residents can watch their investments grow, building wealth over time through the Roots fund.

The "Live In It Like You Own It®" program offers residents:

• Quarterly Rebates are earned by:

  • Paying rent on time

  • Maintaining the property

  • Contributing positively to the community

• Wealth Building: Rebates are invested into the Roots fund, so residents can see their money grow.

• Aligned Interests: Residents gain a financial stake in the property, promoting accountability and pride of ownership.

Bloom’s software integrates with existing property management systems and offers compliance tracking, performance measurement, and streamlined communication to ensure managers meet regulatory requirements while prioritizing resident well-being.

Over 80% of residents participated in Bloom’s programs during the most recent quarter. This high engagement rate proves the appeal of turning rental payments into tangible financial growth. Residents are more likely to stay, maintain their homes, and contribute to their communities — ultimately enhancing portfolio performance.

Aligning Residents with Owners

By transforming renters into stakeholders, Bloom promotes a sense of ownership that directly benefits property managers.

• Longer Stays: Residents who build wealth through rental payments are more likely to stay long-term.

• Better Maintenance: Residents with financial incentives are more likely to report issues and maintain a property.

• Community Engagement: Bloom fosters a culture of ownership and pride, enhancing property value and tenant satisfaction.

Bloom’s compliance tracking and impact measurement tools give property managers insights beyond financial metrics. By evaluating resident satisfaction and engagement, property managers can make smarter, data-driven decisions that enhance profitability.

Our Thoughts

Bloom represents an evolution of how software, community, and capital can converge to create win-win scenarios. Roots remains the flagship, where the community technically lives and where a Regulation A+ fund drives returns. Bloom acts as a bridge, bringing this wealth-building model to a broader audience.

By offering residents a tangible way to build wealth, Bloom aligns their interests with property owners. Helping families build savings they otherwise wouldn't have is not only innovative, it’s life-changing for some.

Roots has proven the model works. Now, Bloom is bringing that approach to a wider audience. 

Ready to turn your residents into partners? Schedule a demo today.

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