What is Arrived Homes?

If you read this site, you know that I am a stock guy. Most of my money is invested in individual stocks, exchange traded funds, and mutual funds. I love stock because of the profit potential and liquidity. When I invest in stock; I always have the option of liquidating a position quickly. Being liquid is a factor in a number of my investment decisions. 

Real estate investing is much more cumbersome process. Real estate is largely illiquid and you need large amounts of capital to get started. You often have to tie your money up for a long period of time to make real money. You have to deal with property management, repairs, collecting rent, and other time consuming hassles. I personally prefer to invest my large capital in equities. I am however always interested in adding more real estate related assets to my investment portfolios. It is always good to diversify your portfolio by investing in different sectors. I love real estate investment trusts (REIT) as they provide an easy way to invest in real estate and receive distributions on a regular basis. Real estate investment trusts pay out 90% of profits to investors. 

Arrived Homes Review

I discovered Arrived Homes by reading a Yahoo Finance article discussing this young upstart company. Arrived Homes intrigued me because the company touts itself as a way of investing in the real estate market without spending huge amounts of capital. I love that! I decided to study the company by checking out its history and platform. I also loved the fact that the article mentioned that Amazon founder Jeff Bezos was an investor along with Salesforce.com founder Marc Benioff. It never hurts to have a couple of the richest men in the world as investors in your platform.

Arrived Homes History

Arrived Homes was founded by Ryan Frazier, Kenny Cason, and Alejandro Chouza in 2019.

Arrived Homes is a crowdfunding platform allowing individual investors to contribute small amounts of capital to finance these home projects. Arrived Homes touts itself as a way of generating passive income. This is very similar to Fundrise. Fundrise was the first major player in the real estate crowdfunding market.

Arrived Homes is an investment platform that allows investors to buy shares in rental properties. The rental properties are single family homes and short-term vacation rental properties. Arrived homes buys homes, renovates homes and then rents the home out to qualified applicants. Arrived homes buys existing homes and new construction homes. 

You can invest in a real estate deal with only $100. You can invest a maximum of $20,000 per house in a real estate investment. Arrived Homes makes money through both acquisition and management. Investors have to pay a 1% percent annual fee and a property management fee of 8% of the gross rental income. Investors receive quarterly cash dividends from rental payments.

My Thoughts

I am currently in the process of evaluating Arrived Homes. 

Opening an account was a quick process. I opened an account and linked it to my bank account in about 2 minutes. I found a number of projects to invest in. I decided to take a shot and invest a small amount of money in 7 different properties. I transferred $1,000 from my savings account and will gauge my results over time. My plan is to invest $500 – $1,000 a month in rental equity offerings.

This is not a platform for people looking to flip homes and make quick cash. Arrived Homes is looking for long term investors, who have a 5 to 7 year investment horizon. I am perfectly fine with that time period as I am a long-term investor. I will evaluate my investment performance every six months to see how the properties are performing. If I receive the dividend payouts as promised, I will continue to contribute capital to the platform. 

I was impressed by the markets that the company is offering houses in. These were several burgeoning markets that are likely to appreciate rapidly and would be attractive to scores of qualified renters. 

I also like that you do not have to be an accredited investor to invest with Arrived Homes. Some crowdfunding platforms are only open to accredited investors. These are individuals who a) make a minimum of $200,000 a year or couples who earn $300,000 a year, b) have a net worth of $1,000,000 or more excluding the primary residence.

Homes are owned by LLC’s which means that as an investor I have no personal liability exposure.

Annualized yields are currently between 3.2% to 7.6%. That’s a solid yield during this time of economic turbulence. 

The Cons

Arrived did not have a lot of available properties. Investors swoop in pretty quickly on available properties. I am glad that I was able to purchase ownership in 7 days. 

Fundrise is cheaper as it does not charge a property management fee.

As with any new venture, there is always the risk of default.