•  Real Estate

Arrived Home Review -- Fractional Investments in Rental Properties

Arrived Homes is a Seattle-based startup backed by Jeff Bezos and Marc Benioff that offers fractional investments in single-family rental properties, open to all US investors

Arrived Homes

  • Founded: 2020
  • Investment Types: Real Estate
  • Sectors: Residential Real Estate
  • Minimum Investment: $100
  • Advertised Returns: 8.8%
  • Open to all investors
 Pros
  • Low minimum investment ($100)
  • Open to non-accredited investors
  • Great investor education materials
  • Easy to view and access current and past offerings
 Cons
  • Currently no early redemption option for shares
  • Dividends paid quarterly, rather than monthly
  • Relatively high fees

Overview

This Arrived Homes Review will help you learn more about Arrived Homes's investment offerings, including how the alternative investments on Arrived Homes are structured, and what your potential returns might be. You can read more about the criteria we use to review investment platforms here.

Founded in Seattle in 2020 and backed by Amazon’s Jeff Bezos and Salesforce’s Marc Benioff, Arrived offers a low-cost way to make fractional investments in individual rental properties.

Like the other major platforms offering Reg A+ REITs, Arrived features low minimums and an easy way for non-accredited investors in particular to get exposure to rental property investing, with both regular cash distributions and the potential for long-term equity appreciation.

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Types of investments Arrived Homes offers

Unlike many of the other investment crowdfunding platforms offering REITs under Reg A+, with Arrived investors can select individual properties to invest in, rather than just investing in a single “blind pool” REIT that will own multiple properties over time with no ability for investors to choose specific properties.

Investments via Arrived are primarily in single-family homes for rent across the United States. As of this writing, the Arrived website lists 150 total properties acquired to date, with 8 of those being active investment opportunities.

Arrived describes their investment strategy this way:

Our investment strategy is to acquire, invest in, manage, operate, selectively leverage and sell single family homes located in vibrant, growing cities across America. We believe that these markets offer investors a blend of attractive capitalization rates and a strong prospect for long term property value appreciation.

What do you get when investing with Arrived Homes?

When you invest in a specific property with Arrived, you invest in a new “series” of the umbrella REIT, which is a Delaware LLC. Each series LLC is treated like a subsidiary entity, as if it were its own separate special-purpose entity (SPE). Shares are priced at $10/share with a minimum investment of 10 shares.

How does Arrived Homes make money?

Arrived earns an annual fee of 1% of the amount invested, which is deducted from the rental income for a property.

There are also property management fees (paid to local property management companies) of approximately 8%, also deducted from the rental income, as well as a 6-7% disposition fee used to cover costs associated with the sale of a property.

Arrived also pays Dalmore, their broker-dealer, 1% of the amount raised in each offering.

The various fees and management expenses associated with the Arrived Homes properties are not unusual for commercial real estate, but investors may wish to review the offerings in detail to be sure they understand the details.

Potential returns and cashflow

Investors receive quarterly distributions, as authorized by the REIT’s board of directors. Also, all REITs are required to distribute 90% of their taxable income annually to retain the favorable tax treatment REITs receive from the IRS (in short, they don’t pay income taxes as long as they distribute at least 90% of their annual income back out to shareholders).

Arrived claims historical returns of between 3.2% and 7.2%. According to Arrived, rental properties have historically returned between 5.5% and 12.1%.

As with most equity real estate investments, the expected hold term for an investment with Arrived is several years. Arrived intends to offer a redemption option starting at 6 months after investment, but does not currently have any early redemption period option, as their current plan is under review for qualification by the SEC.

Breadth of offerings on Arrived Homes

As of this writing, Arrived currently has 8 active investment properties available for funding. In the past, they have offered 141 rental properties. The REIT offers properties across multiple states, spanning from Colorado to the Carolinas.

Regulatory framework and due diligence expectations

Arrived is offering shares in their REITs to all investors, including non-accredited investors, under SEC Regulation A+.

Arrived is offering shares under Tier 2 of SEC Reg A+, which carries with it several mandatory disclosure and reporting requirements. Prospective investors can review the full SEC offering circular here.

Offerings are made through the Dalmore Group, which provides broker-dealer services to quite a few investment crowdfunding platforms. Broker-dealers are subject to specific due-diligence requirements to ensure an investment is “suitable” for their registered customers, or they can face fines and civil action. (That does not of course provide any guarantees about investment return or performance!).

This review was first published on 17 August 2022.


Our Rating

Excellent

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