Arrived Homes

What is Arrived Homes ?

Arrived Homes is a start-up that wants to create an opportunity for everyday investors to get into real estate investing. Earlier this year, the company raised $37 million in seed funding. One of their main investors is Jeff Bezos.

Ryan Fraizer, CEO and Co-Founder, says, “Our goal is to make the wealth-creating potential of rental property ownership more accessible. We believe we can achieve this by simplifying the process and reducing start-up costs. »

Essentially, you can start your real estate investment journey with just $100 through Arrived Homes. As an investor, you’ll collect the dividends from the properties and your share of the appreciation without worrying about the details like finding tenants or handling maintenance requests.

HOW DOES ARRIVED HOMES WORK?

It starts when you create an account with Arrived through their website. When you’re ready to invest, here’s how it works:

1-Browse pre-verified homes.

• Homes are chosen for their investment potential, including:
• Cash flow and appreciation
• Quality of the surrounding neighborhood
• General quality of the house

All potential homes are sent to their investment team for a final check and to make sure they get it at a good price.

Then they turn the house over to their property management team, who hire contractors to rent the house and work to find good tenants to occupy it.

As added insurance, they make their tenants co-owners of the home to ensure that they have invested as much in its success as you, the user.

2-Choose your investment.

You will choose the house(s) you want to invest in and decide how many shares you want to buy. Remember that you can just as easily invest $100 as $50,000.

3-Earn dividends.

Finally, all that remains is to review the terms and sign your name. You earn returns in the form of quarterly dividends on rental income. This translates to an annualized rate of 3.0% to 7.2% per year

Property Types for New Homes

At first, Arrived Homes only concentrated on conventional rentals. However, Arrived Homes disclosed on August 1, 2022, that they also intended to introduce holiday rentals. The first vacation rentals on Arrived became available for investment in September. It now has its own section on their platform.

Beyond the main categories of traditional rentals vs. vacation rentals, you can also filter listings on Arrived by a variety of filters, including:

• Leverage
• Focused appreciation
• Large schools
• Rented
• Newly built

As the name suggests, large schools are properties located in highly rated school districts. Because these areas are more sought after by more families, they likely attract higher rents.

Newly built homes are another great option, as Arrived may have purchased them before construction and they may have “built-in equity”. For example, The Eagle was purchased from the builder in 2021 for $270,000. But after it was built and ready to rent, it was appraised at $336,000. This translated into instant stock appreciation of 24% for investors (36% when you consider The Eagle was 50% leveraged).

Invest in Rental Homes with $100 or more

It is possible to invest in rental homes with $100 or more, but it may not be as straightforward as investing in other types of assets. Some of the ways in which you can invest in rental properties with a small amount of money include:

Real Estate Crowdfunding:  Some platforms allow you to invest as little as $100 in real estate projects. You pool your money with other investors to fund the purchase and management of a rental property.

Real estate crowdfunding works by connecting investors with real estate developers and operators who are looking to raise capital for a specific project. The process typically works as follows:

• A developer or operator creates a listing for a real estate project on a crowdfunding platform, outlining the details of the project, such as the property’s location, purchase price, projected returns, and risk profile.
• Investors can then browse the listings and choose a project that aligns with their investment goals and risk tolerance. They can invest as little as $100 or more in the project.
• Once the fundraising goal is reached, the developer or operator uses the funds to purchase, develop, or renovate the property.
• As the property generates income, such as rent or resale profits, the investors receive a share of the returns based on their investment.
• The platform typically takes a small percentage of the funds raised as a fee for its services.

It’s important to note that real estate crowdfunding carries risks, and it’s always a good idea to consult with a professional before making any investment. Additionally, it’s also important to research the platform and the developer or operator, and to understand the terms and conditions of the investment.

REITs: Real Estate Investment Trusts (REITs) allow you to invest in a diversified portfolio of properties without having to buy or manage them individually. You can buy shares of a REIT for as little as $100.

A Real Estate Investment Trust (REIT) is a type of investment vehicle that allows individuals to invest in a diversified portfolio of real estate assets, such as office buildings, apartments, hotels, and shopping centers. REITs are similar to mutual funds in that they offer investors a way to participate in real estate ownership without having to buy or manage properties individually.

Here’s how REITs typically work:

• A REIT is created when a company raises money by issuing shares of stock, which are then traded on a stock exchange.
• The REIT then uses the proceeds from the stock offering to purchase a portfolio of real estate assets, such as properties or mortgages.
• The REIT generates income from the properties in the form of rent or mortgage payments, and then uses that income to pay dividends to shareholders.
• Shareholders can buy and sell shares of the REIT on a stock exchange, just like with any other publicly traded company.
• REITs must distribute at least 90% of their taxable income to shareholders as dividends in order to maintain their special tax treatment.

It’s important to note that REITs carry risks, and it’s always a good idea to consult with a professional before making any investment. Additionally, it’s also important to research the REIT, its portfolio of properties and its management team before making investment.

House Hacking: This strategy involves living in a property that you own and renting out the other rooms or units to tenants. It can be a way to invest in rental property with a small amount of money, but it does require you to live in the property.

House hacking is a real estate strategy that involves purchasing a property, typically a multi-unit residence, and living in one unit while renting out the other units to cover a significant portion, if not all, of the mortgage and other housing expenses. It’s a way for individuals to live in a home they own, while also generating income from rental properties.

Here’s how house hacking typically works:

• An individual or a small group of investors purchase a multi-unit property such as a duplex, triplex or fourplex.
• They occupy one of the units as their primary residence and rent out the other units to tenants.
• The rental income from the other units is used to cover a significant portion, if not all, of the mortgage, property taxes, insurance, and other housing expenses.
• This way the house hacker can live in a home they own, while also generating income from rental properties.
• Over time, the house hacker may be able to pay off the mortgage and own the property outright, or keep the property and continue to collect rental income.

House hacking can be an effective strategy for individuals looking to get into the real estate market and build wealth, but it’s important to keep in mind that this strategy also comes with risks and challenges, such as the responsibilities of being a landlord and the potential for vacancy or default on the rental units. It’s always a good idea to consult with a professional before making any investment and also make sure to understand the local laws and regulations before becoming a landlord.

Real estate-backed loan: Another way to invest in rental property with a small amount of money is to invest in a real estate-backed loan. This is a loan that is secured by a property.

A real estate-backed loan, also known as a mortgage, is a type of loan that is secured by a piece of real estate, such as a house or a commercial property. The loan is used to purchase the property, and the lender, typically a bank or other financial institution, takes a lien on the property as collateral.

Here’s how real estate-backed loans typically work:

• An individual or a small group of investors wants to purchase a property, they will have to apply for a mortgage loan. The lender will typically require that the borrower provide detailed information about their income, credit history, and assets, and may also require an appraisal of the property.
• If the loan is approved, the lender will provide the borrower with the funds to purchase the property. The borrower will then use the funds to pay for the property and any associated closing costs.
• In exchange for the loan, the borrower will be required to make monthly payments to the lender, which typically include both the principal and interest. The interest rate may be fixed or adjustable, depending on the terms of the loan.
• If the borrower fails to make payments on the loan, the lender has the right to foreclose on the property and take possession of it.

It’s important to note that real estate-backed loans come with risks, and it’s always a good idea to consult with a professional before making any investment. Additionally, it’s also important to research different lenders and loan options, and to understand the terms and conditions of the loan.

ARRIVED HOMES FEES

There are a few fees you should be aware of before deciding to invest in a property with Arrived Homes. Let’s see what they are.

• Annual management fee: 1% per year

Annual management fees are paid directly to Arrived for the work they do to keep the business running.

• Property management fee: 8% of rent

Property management fees are used to pay the individual property managers who take care of the day-to-day.

• Provisioning Fee: One-time fee, varies by property

Provisioning fees are paid once upon purchase. It is included in the share price you find when choosing the property, but you can find it specified on the investment page in the “offer details” section.

Arrived’s fees are competitive with other real estate platforms like Fundrise, which also charges a 1% annual fee. However, Fundrise does not charge property management fees.

Historical Results

Due to its recent start in 2019, Arrived Homes has a short track record, which is one drawback. However, it has provided investors with yearly dividends ranging from 3.2% to 7.2% since its founding. This is also without taking into account possible property appreciation.

Arrived Homes is off to a terrific start, and the fact that all available properties are currently sold out is encouraging. Additionally, the business raised $25 million in a Series A round in May 2022, with participation from major investors like Spencer Rascoff, the former CEO of Zillow, and Jeff Bezos’ company Bezos Expeditions. The expansion of investment opportunities should be aided by this money, which is fantastic news for investors who are now on the sidelines.

Fianancial Liquidity

The target holding term for the majority of Arrived Homes listings is five to seven years. Given that buying real estate is often a long-term investment, this makes sense.

However, if shareholders have held shares for at least six months, Arrived Homes permits shareholders to sell their shares on a quarterly basis. However, it’s still not quite apparent how this secondary market operates. Arrived Homes claims there can be fees associated with selling shares, and it cannot guarantee that shares can even be redeemed. Additionally, it adds that when you attempt to sell your shares, it will reveal any potential fines and penalties.

This is comparable to Fundrise, which charges a 1% penalty for shares that are liquidated before five years. Additionally, Fundrise doesn’t ensure that you can sell shares. Because of this, you might not have the liquidity you believe you possess during difficult market or company conditions. Crowdfunding organizations do this to safeguard the greater pool of investors from mass selling.

Despite this, the majority of crowdfunding businesses lack secondary marketplaces and liquidation windows. It’s good that a new business like Arrived Homes is even providing this.

Arrived Homes: What Makes Them Great?

Arrived Homes is a suitable option for those looking to earn passive rental income with a low investment minimum. The platform has low annual fees, and while the upfront fee may be high, it is typical in the crowdfunding industry. With quarterly dividends and potential property appreciation, Arrived Homes has demonstrated the ability to provide solid returns. Additionally, the platform provides a wealth of information for due diligence on properties. One of the most unique features of Arrived Homes is that it allows tenants and homeowners to become co-investors, which can lead to lower maintenance costs. The platform also creates mutually beneficial scenarios for tenants, investors, and homeowners by allowing homeowners to sell their properties and retain a percentage of shares as equity

Where Arrived Homes Might Need Improvement

Currently, the main drawback of Arrived Homes is the limited number of listings available on the platform. Despite high investor demand, there is not enough supply to meet it. This can also mean that the minimum investment amount is low, such as $100, to allow as many investors as possible to participate. This high demand is a positive sign, but it also means that investors who want to invest larger sums, like $50,000, are not able to do so at this time. The company’s planned Series A funding round may help increase the offerings on the platform. Additionally, it would be beneficial for Arrived Homes to offer options for diversification, such as REITs or bundles of properties. However, this is not a major concern as the low minimum investment requirement allows for investment in multiple properties.

What are the benefits of investing in a home with Arrived?

It’s accessible.

Anyone can do it. Most average Americans don’t have a few hundred thousand dollars in the bank. With Arrived, you can invest with as little as $100.

It’s certain.

While any investment involves risk, holding real estate alongside your other investments – and additionally, shares of multiple properties – allows you to reduce that risk to more comfortable levels.

Moreover, since Arrived also makes its tenants shareholders, they have a vested interest in keeping the house in good condition.

Each property is placed in an LLC when purchased, so there is no concern about legal liability for any investor.

It’s easy.

Not only is investing easy with Arrived, but the property itself is too. There are no relationships with tenants or property managers. You don’t have to worry about your time and money being gobbled up on maintenance because they take care of it.

It’s not free.

Regardless of the size of your shares, your payments will be quarterly like clockwork. And you benefit not only from the rental income, but also from the appreciation of the property itself.

The declared annual dividend yield is 3.0% to 7.2%.[1] Appreciation is different for each property, but some have seen over 40% appreciation.

It’s profitable.

Economy of scale is one of the advantages of inbound users over traditional owners. Typical homeowners must deal with maintenance issues on a case-by-case basis.

Since Arrived manages a large number of properties, they can obtain contract services at wholesale prices. These savings can be passed on to you.

It’s professionally handled.

Arrived Homes has access to software that helps them identify good properties to invest in. Software that is not available to ordinary buyers like us.

As a dedicated platform, they can afford to spend money on tools that make work more efficient and effective.

It is a smart tax measure.

There are tax benefits to investing in real estate, with special deductions offered specifically for this type of investment.

ARRIVED HOMES: ARE THERE ANY CONS?

Even though there are many positive aspects of Arrived Homes, there are a few things you may want to think about before making a purchase.

It’s not for investors with short-term goals.

Most investment terms are 5-7 years, which is common for real estate investments. It’s definitely not as liquid as stocks or crypto, even if these are admittedly much more volatile.

If you don’t want your money tied up for more than 5 years, look downstairs. Groundfloor allows you to invest in short-term housing projects that only last 6-12 months.

It’s not always simple to withdraw money.

Being present right now prevents you from withdrawing early. After six months, consumers will be able to request an early redemption of their shares through a program that is currently being developed. However, they are unable to promise that any redemptions would be successful.

Additionally, a secondary market where users can deal directly with one another is being developed. However, they are unable to guarantee that it will progress or that someone will purchase your undesirable shares.

Fundrise features a quarterly redemption program if you’d want flexibility. Even some of Fundrise’s funds have no early withdrawal fees.

Its selection is constrained.

Currently, there aren’t many properties available on Arrived. Although their list of investors and strategy are reliable, they haven’t completely finished developing them yet.

You might have to wait to find greater choice in the kind of properties you can choose.

A more reputable site for purchasing single-family homes is Roofstock. However, since you would be the sole owner of the property, a sizable down payment is required.

Pros :

• Low $100 investment threshold Earn dividends on rental income per quarter; entirely passive income
• In order to manage properties and tenants, Arrived Homes collaborates with expert contractors and property management firms.
• annual management fee of just 1%
• No requirement for accreditation

WHAT COMPARES IT TO?

Fundrise

Fundrise is a real estate crowdfunding platform that allows individuals to invest in commercial and residential properties, while Arrived Homes doesn’t seem to exist.

Here is how Fundrise compares to other real estate crowdfunding platforms:

1. Investment model: Fundrise allows individuals to invest in commercial and residential properties, while other platforms may specialize in one or the other.
2. Minimum Investment: Fundrise has a low minimum investment of $500, while other platforms may have higher minimums.
3. Fees: Fundrise charges an annual management fee of 0.15% to 0.85% of assets under management, while other platforms may have different fee structures.
4. Geography: Fundrise operates in many states of US, while other platforms may have a more limited geographic focus.
5. Risk and return: Fundrise aims to generate a return on investment of 8% to 12% per year, depending on the specific investment opportunity, while other platforms may have different expected returns.

It’s always a good idea to do your due diligence and research any company or investment opportunity before committing any money. This includes understanding the fees associated with the investment, what services are provided for those fees, and what the expected return on investment is. It’s also a good idea to consult with a professional before making any investment.

Groundfloor

Groundfloor is a real estate crowdfunding platform that allows individuals to invest in short-term, high-yield real estate loans. Here is how Groundfloor compares to other real estate crowdfunding platforms:

1. Investment model: Groundfloor allows individuals to invest in short-term, high-yield real estate loans, while other platforms may allow individuals to invest in other types of real estate assets such as rental properties.
2. Minimum Investment: Groundfloor has a low minimum investment of $10, while other platforms may have higher minimums.
3. Fees: Groundfloor charges origination fees and servicing fees on loans, while other platforms may have different fee structures.
4. Geography: Groundfloor operates in some US states, while other platforms may have a more limited geographic focus.
5. Risk and return: Groundfloor aims to generate a return on investment of 6% to 12% per year, depending on the specific investment opportunity, while other platforms may have different expected returns.

It’s always a good idea to do your due diligence and research any company or investment opportunity before committing any money. This includes understanding the fees associated with the investment, what services are provided for those fees, and what the expected return on investment is. It’s also a good idea to consult with a professional before making any investment.

How Can I Create An Account?

Prepared to start using Arrived Homes? You must first create an account using your email address and a password. Your legal name must then be provided, and you must also accept Arrived Homes’ terms of service.

When you’re prepared to invest in an offering, you can link your bank account and further investigate the possible properties. None of the properties were ready for investment when I browsed the platform. Instead, I had the choice to hold shares and get notification of the investment deadline.

Is it secure and safe?

When investing in real estate, it is important to be aware of the risks involved. Real estate investments can be illiquid and may not be easily sold, and the value of the investment may fluctuate with changes in the local market. Additionally, you may be responsible for property management and maintenance, which can be costly.

It’s always a good idea to consult with a professional before making any investment. A financial advisor can help you understand the risks and potential rewards of a particular investment and determine if it is appropriate for your investment portfolio.

It’s also important to know that there is always a risk of fraud when investing, and it is essential to be aware of the warning signs of a fraudulent investment. I would recommend you to do research on the company, the team, and their track record, also to check their credentials and regulatory compliance.

Arrived Homes offers the opportunity to invest in real estate, which carries inherent risks. It is possible that you will lose money on a trade. But so far this has not been the case.

In terms of liability protection, Arrived Homes protects you from personal liability. Each property is placed in an LLC. As an investor in any home, you will invest in the LLC. With this, you will not be personally liable if any legal action arises regarding a particular property.

With any real estate investment site, it is important to discuss liquidity. The expected holding period for investments listed on its site is 5 to 7 years. That’s a lot of time to have your money tied up, especially compared to stocks and ETFs which can be sold at any time.

Arrived Homes says investors will be able to request early redemption of their shares after 6 months. But he also says there’s no guarantee a secondary market will develop. In other words, you may have difficulty finding a future buyer who will want to buy back your shares.

How Do I Get in contact With Arrived Homes?

Do you wish to contact Arrived Homes? Contact them by phone at 1-814-277-4883, via the Live Chat option on their website, or by sending an email to support@arrivedhomes.com.

You can also follow Arrived Homes on Facebook, Twitter, Instagram, and LinkedIn.

Does It Pay Off?

We adore the Arrived Homes concept for people who wish to invest in real estate without having to become a landlord. However, the platform appears to still be under construction as there aren’t many properties that are genuinely ready for investment at this time.

Arrived Homes has the potential to become into a significant player in the world of real estate investing. They’ve been steadily expanding their inventory on the platform, and new users often have access to somewhere between 4 and 10 different investment alternatives.

Conclusion

There is a lot to like about Arrived Homes, so give it some thought if you’re looking to add real estate to your investing portfolio for diversification.

However, Arrived Homes’ selection is really small; hence, there could not even be any properties available. Fundrise is a superior choice if you want readily available real estate investments.

It’s also important to keep in mind that crowdfunding single-family houses to be rented instead of purchased by the folks who live in them may further exacerbate the issue in a housing market where average buyers are increasingly being driven out by corporations and affluent investors.

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