The American dream of homeownership has faced significant challenges in recent years. Rising home-buying costs have pushed many into the tenant pool. This shift has caught the eye of major investment firms, leading to a surge in funds dedicated to acquiring or constructing single-family homes for rental purposes. Among these firms, a notable new entrant is Arrived, a young real estate company backed by Amazon.com Inc. founder Jeff Bezos.
Arrived is making a name for itself in the single-family rental fund space, operating a fractional real estate investing platform that has rapidly gained traction since its 2021 inception. This platform stands out for its accessibility, allowing nearly half a million retail investors to buy into single-family rental properties – individuals can start with as little as $100. So far, investors on this platform have put money into over 388 homes, totaling more than $122 million in value. These homes are so popular that they are often fully funded just hours after being listed. Popularity has led Arrived to limit how much people can invest in some homes.
The company’s latest venture, the Arrived Single Family Residential Fund, represents a strategic evolution. This fund streamlines the investment process. It makes investing easier, allowing people to put in more money whenever they want without waiting for each house to be listed. Investors in this new fund will benefit from a diversified portfolio spread across numerous real estate markets. Plus, Arrived is introducing a quarterly redemption or liquidation option for shares, available after the first six months.
Ryan Frazier, CEO of Arrived, is optimistic about the single-family home market’s potential. He points to its history of solid returns and lower volatility than the stock market coupled with a persistent housing demand exceeding new home supply for over a decade. The third quarter of 2023 highlighted the platform’s success, with investors earning approximately $890,000 in dividend income, a notable increase from the previous quarter. Arrived has distributed over $2.8 million in dividends in the past year, showing that Frazier’s optimism is not unfounded.
Even with this new fund, Arrived isn’t stopping their original way of doing things. The platform continues to offer individual property shares, maintaining the $100 minimum investment threshold that has democratized real estate investment.
Arrived’s pioneering approach in the real estate sector has not gone unnoticed. It was the first SEC-qualified real estate investing platform enabling almost anyone to buy shares in single-family rental properties. This innovative model has attracted significant investment and interest from high-profile figures, including tech moguls like Marc Benioff, Spencer Rascoff, and Dara Khosrowshahi, alongside Bezos, who demonstrated his continued support with a second investment during Arrived’s $25 million Series A funding round in 2022.
This development in real estate investment reflects a broader trend: the increasing appeal of real estate as an investment class, particularly in the volatile stock market and the changing American housing market. As companies like Arrived continue to innovate and open up new avenues for investment, they provide alternatives to traditional homeownership and offer a novel approach to building wealth in the real estate sector. With its blend of technological innovation, accessibility, and the backing of industry heavyweights, Arrived is well-positioned to impact the single-family rental fund space.