At a glance
- What It Is: A rental property investment platform focused on single-family homes in high-return markets.
- Who It’s For: Everyday real estate investors (including first-time investors) seeking diversification away from market-traded equities and no responsibility for property management.
- How Arrived Homes Makes Money: Agent rebates (paid by the previous property owner), sourcing fee (included in raise amount and share price), annual asset management fee (deducted from investors’ proceeds).
Pros of Arrived Homes
- Investment minimums as low as $100 per property
- Easy access to high-return geographical markets
- No personal liability or operational responsibility for investors
- High standards for properties and renters
- Consistent cash flow for investors
- No need to be an accredited investor
Cons of Arrived Homes
- Properties sold out as of November 2021
- No reliable redemption or secondary market as of November 2021
Rental property ownership is a potentially lucrative prospect. Its possible financial benefits include — but are by no means limited to — generous tax benefits, hedging against inflation risk, and diversification away from market-traded equities whose price movements tend to be closely correlated.
But finding investment-grade rental properties is difficult and time-consuming. Unless you can spend lots of time on the road — unlikely if you also have a full-time job — your ability to personally evaluate properties outside your hometown is limited. Even if you’re able to do your own due diligence, you might be deterred by high investment minimums.
Fortunately, there’s a better way. Arrived Homes, a digital rental property investment platform, makes it easy to build a geographically diverse portfolio of rental homes. And with a minimum investment of just $100 per property, it’s well within reach of the average person — not just high net worth accredited investors.
Key Features of Arrived Homes: How the Process Works
Arrived Homes’ four-step rental real estate investment process couldn’t be more straightforward. Here’s what to know about each part of the process before getting started.
1. Browse Available Homes
Your first step is to browse individual homes available through Arrived Homes. By the time a home appears on Arrived’s website, it has already been subjected to a thorough vetting process that ensures Arrived purchases the right homes at the right price.
Specifically, that process considers:
- Market Cash Flow Potential: Arrived combs through hundreds of local real estate markets to find those with the best cash flow potential for single-family residential real estate.
- Market Appreciation Potential: Arrived also considers housing price trends in each market and selects for high property appreciation potential.
- Neighborhood and Home Attributes: Arrived uses its considerable local market knowledge and proprietary analysis protocols to select desirable homes in desirable neighborhoods.
- Investment Committee Review: Before purchasing a property, Arrived presents its analysis to its investment committee for a thorough review. This ensures Arrived acquires properties that offer maximum income and appreciation potential for its investors.
Arrived’s property listings contain a wealth of information about available homes, including:
- Key features of the home, like square footage and bed and bath count
- Purchase price
- Monthly rent
- Rental status (generally, rented or on-market)
- Independent valuation reports sourced from Zillow
- Real estate price trends for the surrounding area
- Financing and equity details (how much of the how is financed versus owned outright)
- Raise amount (how much Arrived is seeking from investors)
- Share price and count
- One-time proceeds to Arrived
- Arrived’s annual management fee
- A property financial breakdown covering operating income, allocation to cash reserves, dividends paid to investors, and other details
- Key details about the local economy where the home resides, including population growth rate and major employers
2. Select Your Investment Property or Properties
Next, determine how much you want to invest and in which properties. You can customize the number of shares you purchase in each property as long as you meet the minimum investment threshold and enough shares remain to be purchased to fill your order. You can mix and match properties however you see fit, too.
3. Buy Shares
When you’re ready to buy shares in an Arrived property, carefully review all offering materials before committing to a purchase. These documents contain important information about potential investment risks and outline the terms of your investment.
Bear in mind that your investment is not as liquid as investments in market-traded securities — Arrived advises an anticipated hold period of five to seven years for each property it invests in.
If you’re comfortable proceeding with your investment, you’re ready to electronically sign the investment documents and fund your investment from an external bank account of your choosing.
4. Earn Income & Appreciation While Arrived Manages Your Property or Properties
Now comes the fun part. As an Arrived Homes investor, you have absolutely no operational obligations.
That means no responsibility to visit the property, communicate with tenants, make repairs, or perform any other property management duties. Your job is to sit back and collect passive income — quarterly property dividends paid out of operating income — and periodically review your investment to make sure it’s performing in line with your expectations.
Your net return on any given property or property portfolio can vary based on market conditions, operating expenses, and other factors. But property dividends have produced an annual return on investment between 5.41% and 7.02% as of Q3 2021, according to Arrived.
How Arrived Homes Makes Money
Arrived Homes makes money in three different ways:
- Agent Rebates: Arrived Homes collects a real estate agent rebate when it purchases a property. This rebate is paid by the previous owner, not Arrived investors or Arrived itself.
- Sourcing Fee: This is a one-time fee that covers Arrived’s work to source and prepare the property for investment. It may include Arrived’s cost to finance and hold the property during the offering phase.
- Annual Management Fee. This is a recurring fee based on investors’ capital contributions. It’s paid out of the property’s operating income and covers the ongoing cost of property management.
Advantages of Arrived Homes
Arrived Homes has several notable advantages for property investors. Among them are its very low investment minimums, thorough renter vetting, no personal liability for investors, access to high-return markets regardless of where investors live, and
- Very Low Investment Minimums. You can invest in an Arrived Homes property with a minimum investment as low as $100. That’s as little as $2,000 for shares of 20 different properties — and brings true portfolio diversification within reach of everyday investors.
- Access to High-Return Markets Regardless of Investors’ Location. Arrived Homes evaluates hundreds of U.S. housing markets to find those with the highest potential return on investment. That’s good news for investors who don’t live in a high-return real estate market.
- No Personal Liability for Investors. Arrived Homes purchases homes through limited-liability corporations (LLCs), and its investors buy shares in those companies. This indirect ownership model insulates Arrived investors from personal liability for issues arising from Arrived’s property ownership or management.
- Thorough Due Diligence on Properties. Arrived subjects potential investment properties to a rigorous due diligence process. Its investment committee selects only the highest-quality opportunities, giving investors confidence no matter how they choose to invest.
- High Standards for Renters. Arrived has a thorough vetting process for renters as well. This decreases (but doesn’t eliminate) the risk of delinquencies and vacancies that may negatively impact cash flow to investors.
- No Operational Responsibility for Investors. Arrived takes full responsibility for property management. As an investor, you’re under no obligation to handle any aspect of management and won’t need to check in on your properties on a day-to-day basis.
- Consistent Cash Flow for Investors. Arrived goes to great lengths to ensure that you’ll consistently receive rental income from your properties. Although actual rates of return may vary, you can expect consistent cash flow on your investments.
Disadvantages of Arrived Homes
Arrived Homes has two notable disadvantages as of November 2021: It’s currently sold out of available properties and it has no formal share redemption program or secondary market.
- Sold Out of Available Properties As of November 2021. Arrived Homes is sold out of available investment properties as of November 2021. The company is actively working to bring new properties online, and the best way to learn about opportunities as they become available is to create an account.
- No Secondary Market or Formal Share Redemption Program As of November 2021. Arrived is working on a formal share redemption program and possibly a secondary market for property shares as well. Both would increase liquidity for investors, but neither is available as of November 2021. This is a potential downside for Arrived investors seeking a reliable way to sell their shares before the end of the anticipated five- to seven-year hold period. For the time being, Arrived may honor redemption requests but does not guarantee that it will.
Arrived Homes is a digital real estate crowdfunding platform with very low initial investment minimums — as low as $100 per property — and the promise (although not the guarantee) of consistent rental payments for its investors.
Arrived has other benefits too. You don’t need to be an accredited investor to participate in Arrived’s offerings. You don’t have to live anywhere near the homes you invest in or take on any responsibility for property management. And you don’t have any personal liability for what goes on in the homes you invest in — which might not be the case when you purchase rental properties directly.
All in all, Arrived Homes is a great choice for anyone eager to diversify away from tightly correlated securities investments and gain exposure to rental real estate. Why not take the next step and see if it’s the right fit for you?