In this Arrived review, you’ll learn:
- How Arrived works.
- Important details about how investments are structured.
- Alternatives to Arrived.
- Whether it’s right for you.
For investors seeking cash flow, Arrived has historically paid dividends in the range of 2% to 9.9% annually (based on 2023 Q3 financial reporting), with single-family residential properties averaging 3.9% and vacation rentals averaging 4.4%. Aside from cash flow, investors can increase their returns if the property appreciates in value. The estimated timeline of each investment is five to seven years, with very limited liquidity options. If you have a well-diversified stock and bond portfolio and a long time horizon, Arrived is worth a look as a source of extra diversification and income.
- No accredited investor status needed.
- Only a $100 minimum.
- Can invest in a fund or individual properties.
- Limited track record.
- Limited properties are available and investments can sell out fast.
- No predetermined liquidation event.
How Arrived Works
Residential real estate (such as single-family homes) has been a sought-after investment for decades. Rental payments from residential real estate offer investors a steady source of income, and while it’s not without its ups and downs (such as the period between 2008 and 2011) the chart below shows that when you zoom out, property prices have consistently risen over time.
That combination of passive income and appreciation has made residential real estate investment a coveted alternative asset class.
The downside to residential real estate is the difficulty of buying and managing rental properties yourself. It’s not easy being a landlord, and while you can outsource to a property management company, that eats away at the returns for smaller investors.
It can be even more cumbersome to manage a listing on sites like Airbnb and VRBO, where property owners must vet clients, answer client questions during a stay, and then get the place ready for the next tenant.
Launched in 2021 and backed by Jeff Bezos, Arrived is the first company that offers investors direct access to single-family rental and vacation homes through an online platform.
You can view the available investments on their site, which offers key details about each individual home.
You can purchase shares in any property on the Arrived platform, investing as little as $100 (and a maximum of $20,000).
In Q4 of 2024, Arrived launched its Single Family Real Estate Fund, which allows investors to invest in a diversified portfolio of multiple pre-vetted rental properties across different markets.
You’re then paid dividends based on net income each quarter; when the home sells, you’ll receive returns from the appreciation of the home (if any).
Arrived Investment Offerings
Arrived’s real estate investments are single-family vacation and rental homes.
What makes Arrived different from the dozens of other real estate investment platforms is that the company specializes in single-family rental and vacation home investing. There are no duplexes, townhomes, condos or commercial buildings on the platform.
The typical home has an average price of $250,000 to $500,000, although there are a handful of properties outside of this range. Generally speaking, however, the homes on the platform are mid-range rather than high-end properties
How does Arrived choose what homes to invest in?
Arrived breaks down its home-buying process into six steps:
- Identify the most lucrative markets. They list job growth, sustained economic development, rising population growth and affordability as key factors.
- Narrow down the top neighborhoods. Within these lucrative markets, the goal is to identify the neighborhoods with good schools, low crime rates and fast commutes to the city’s economic center.
- Develop ideal home criteria. Within each neighborhood, they’re looking for homes that offer the ideal mix of price, bed/bath configuration, square footage, year built and level of renovation.
- Source deals to find the hidden gems. They aim to be creative in sourcing their deals, so they’re able to purchase homes at the lowest possible price. This includes building relationships with experienced sales agents and property wholesalers, and buying direct from sellers.
- Make the right offer on the right home. Once the ideal home is found, it’s approved by the investment committee and a cash offer is made on the property.
- Invest in renovation strategically. They focus on the renovations that will net the highest return for both rental income and appreciation value.
Are Arrived homes financed?
Arrived utilizes financing on some, but not all, properties.
Each property’s “Property Leverage” section clearly indicates if financing is used and, if so, what percentage.
If financing is present, Arrived may have originally acquired the property using a mortgage covering 50-70% of the purchase price. This loan stays with the property when ownership is transferred to investors.
For financed properties, Arrived might refinance the loan later if interest rates decrease enough to warrant the associated closing costs. However, homes labeled as “No Financing” per the property details are intended to operate without leverage or future refinancing.
Some homes have a “Strategic Refinancing” label, meaning they could add a loan if rates drop substantially.
Furthermore, mortgages are non-recourse, meaning investors have no personal liability for the debt.
This flexible structure allows investors to pick homes that match their views on rates, or to diversify their personal portfolios further from interest rate risk.
Who can invest with Arrived?
Arrived is open to non-accredited investors over the age of 18 in the U.S.
Who owns the home?
Each home is held in its own LLC.
As an investor, you’ll buy shares in the LLC, where your interests are the total percentage of the LLC you own. For example, if you invest $5,000 and the total amount invested is $100,000, you’ll own 5% of the LLC.
Investors are not required to sign personally, which means they incur no personal liabilities with the home.
Who is responsible for repairs and other expenses?
Investors in each property receive dividend payments equal to free cash flow, aka net income on the property.
So, while you’re not physically calling the service company to come out and perform maintenance (or doing it yourself), the cost is deducted from your dividend payments.
What type of return should you expect?
As of Q3 2023, Arrived has invested in over 300 properties with a total market value exceeding $121 million.
For single-family homes, annualized returns over the quarter averaged between 2% and 9.9% from dividend income, with a mean of 3.9%.
Arrived provides individual “Property Share Prices” based on third-party valuations. In Q3 2023, 185 existing properties saw share prices change between -20.1% to +9.5%, with a mean decrease of -1%.
So while historical total returns are not confirmed given the short operating history, one can expect dividend yields generally averaging 3% to 4% based on recent distributions. Appreciation figures will likely fluctuate widely based on market conditions.
Federal Reserve data shows that the average appreciation of home prices since 1980 has increased by 4.22% per year. Ideally, Arrived can use its ability to be selective about which markets to purchase in to produce higher returns than the median. But of course, there’s no guarantee of that.
As you can see, with an average decrease of 1% YoY, this real estate can go down.
As Robert Schiller, Sterling Professor of Economics at Yale University has pointed out, “From 1890 to 1990, real inflation-corrected home prices were virtually unchanged.”
We’ve all heard the disclaimer that past performance is no guarantee of future results. This is true about any investment (stocks, bonds, real estate, etc.). So, while we can combine dividends and appreciation to get an estimated 7% to 8% return, it’s important to understand that this isn’t guaranteed.
What happens when you want to sell your shares prior to Arrived selling the property?
The expected hold time for each individual property is five to seven years. This isn’t guaranteed, however, and property can be sold outside of this duration pending market conditions.
What’s clear is that Arrived, and therefore investors like yourself, are not looking at properties to flip. They’re looking to hold these properties for a minimum of a few years before selling.
If for any reason you want to sell your shares, you’re able to do so on a secondary market offered by Arrived. However, there is no guarantee of liquidity on the secondary market, nor is there a guarantee as to a minimum amount you’d receive from Arrived shares.
In other words, your initial investment with Arrived should be a five to seven year commitment.
For the Arrived Residential Fund specifically, limited redemption is offered starting six months after investing. Up to 5% of the fund’s shares can be sold quarterly, subject to approval.
What fees does Arrived charge?
There are two fees charged for investing through Arrived, and the specific costs are different depending on the property you’re investing in. You’ll want to scroll down to the bottom of each listing and review the “Deal Terms” section to see what the fees for the specific property are.
Two fees that are passed on to investors are:
- Sourcing Fee. This is a flat fee for putting together the investment. Browsing sourcing fees on the platform, I found this fee to be between 3.5% to 4.75% of the total purchase price.
- Asset Management Fee. There is an annual asset management fee that’s expensed to investors of each property. I found management fees in the range of 4% to 5% of the annual rents.
The Arrived Single Family Residential Fund has an additional flat 0.25% fee that is assessed quarterly.
Arrived Alternatives
Currently, Arrived is the only company in its category, offering non-accredited investors access to single-family homes for just $100.
Fundrise is another real estate investment company that is worth considering if you’re looking to add alternatives to your portfolio.
Some of the key similarities include:
- Fundrise offers a low minimum investment at just $10 for some plans.
- Dividends are paid quarterly
Differences are:
- While some residential real estate is offered, Fundrise specializes more in commercial properties.
- Fundrise invests in both debt and equity deals.
- Fundrise has a longer track record and has successfully exited projects.
You can learn more about these and other factors to consider in our full Arrived vs. Fundrise comparison article.
See also: Learn about additional alternatives in our list of the top crowd-funded real estate investing platforms.
Is Arrived a Good Investment?
Arrived has grown quite a bit since inception. However, growth in investor base and total deals doesn’t necessarily equate to financial success for investors.
Since it’s new, their track record on dividend payments is very limited. When it comes to their ability to pick rental property that appreciates in value, it will be a few years before we can judge their performance.
With that in mind, while I really like what the platform brings to the table in the real estate space, investors should realize that it’s still very, very early for this company.
If you have a properly diversified portfolio of stocks and bonds, and your time frame is five years out or more, Arrived is a solid choice for adding some more diversification and income to your portfolio, and one of the best ways to invest in real estate with little money.
Just invest accordingly based on their limited-track record so far.
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