Arrived Homes: An Easier Way to Invest in Real Estate
Published Jan 12, 2022•Updated Jun 21, 2022
Arrived Homes wants to make real estate investing more accessible to the everyday investor. With Arrived Homes, you can enjoy the benefits of real estate investing (namely the consistent interest payments) without any of the regular hassles.
Arrived Homes takes care of everything from searching for the rental properties to dealing with tenants, renovations and contracts. Arrived Homes lets you start investing in residential rental properties for as little as $100.
In this detailed Arrived Homes review, we explain what Arrived Homes is, how you can use it to earn money with real estate investing, the pros and cons and much more.
Borrow our cheat sheet
1% on average
Minimum to invest
Invest in rental properties from just $100
Pros and cons
Low minimum investment of $100
Available to non-accredited investors
Consistent passive income
Limited liability—every Arrived Homes property is placed in an LLC Series that protects investors from any type of liability
Not ideal for investors with a short-term investment horizon as the hold period for each property is between 5 to 7 years
Relatively short history (founded in 2019)
Limited types of real estate options (only offers investments in residential rental properties)
What is Arrived Homes?
Arrived Homes is a Seattle-based crowdfunded real estate platform that allows investors to purchase fractional shares of quality rental homes. Arrived Homes was founded in 2019 by CEO Ryan Frazier, CTO Kenny Cason, and COO Alejandro Chouza. In the summer of 2021, Arrived raised $37 million from a group of investors that included billionaires Jeff Bezos (Bezos Expeditions) and Mark Benioff (Time Ventures).
The purpose of Arrived Homes is to simplify real estate investing. In the past, real estate investing was reserved for those who could afford it and those who had the time and knowledge to manage investment properties. Arrived Homes is working to break down the traditional barrier by creating an easy-to-use investing platform that is accessible to the everyday investor. For just $100, both accredited and non-accredited US investors can buy shares in income-producing single-family rental properties.
If you're looking to start investing in real estate but you don’t have the time or the money to invest on your own, Arrived Homes might be a great investment opportunity for you to consider.
How does Arrived Homes work?
Arrived Homes uses data science and a rigorous review process to ensure they find the right homes and the right prices. To do this, Arrived analyzes hundreds of different markets to determine which ones can offer strong property appreciation potential in addition to strong cash flow. Once Arrived has found a selection of properties that meet their standards, they present them to their investment committee for review.
Once Arrived has located properties, its operation team takes over to ensure the property is managed efficiently. The operations team works with contractors to renovate the properties and local property managers to vet potential tenants. They also monitor the properties for issues using a technology platform and are responsible for providing customer service to the tenants.
All you have to do is log onto the Arrived Homes platform, browse the available rental properties and decide which ones you want to start investing in. After making your investment, all you have to do is sit back and wait for your earnings to start rolling in.
Who can invest with Arrived Homes?
Arrived Homes allows U.S. Residents above the age of 18 to participate. The platform accepts both accredited and non-accredited investors. You can also invest through certain entities or self-directed retirement accounts.
Where Arrived Homes gets it right
With a $100 minimum investment, Arrived Homes provides a low barrier to entry for real estate investing. Arrived Homes also allows both accredited and non-accredited investors to participate.
No operational responsibility
Arrived Homes makes investing in real estate really easy. Once you’ve selected the properties you want to invest in and purchased shares, your job is done. Arrived Homes takes care of everything else, from renovating the properties to dealing with the tenants.
You can easily diversify your real estate portfolio by investing in multiple real estate properties in different geographic locations. Plus, investing in real estate is a good way to diversify your overall investment portfolio as real estate, specifically private real estate, is not highly correlated with the stock market.
Where Arrived Homes could do better
Anticipated hold periods for each Arrived Home property is 5 to 7 years. So, if you’re looking for a short-term investment or you think you might need your money in the short term, this might not be the investment opportunity for you.
Relatively short history
Founded in 2019, Arrived Homes hasn’t been around for long. This shouldn’t necessarily stop you from investing with Arrived Homes but it’s something you might consider when making your decision.
Arrived Homes only offers residential rental properties so if you are looking for different types of real estate investments, you will have to look elsewhere.
Can you really make money on Arrived Homes?
There is an opportunity to make money as an investor in Arrived Homes. Arrived Homes reports that its investors received cash dividends in the second quarter of 2021 at an annualized rate of 5.21% to 6.42% per year. In Q3 2021, Arrived reported dividend payments that correspond to an annualized cash return on investment of between 5.95% and 7.54%. Historically, Arrived Homes reports cash dividends from rental properties that translate to 5.4 to 7.0%.
In addition to dividend earnings, there is also an opportunity to make money from property value growth. However, this is difficult for Arrived to report as appreciation is hard to measure until the property has been sold.
When you include dividend payments and the potential for value growth due to appreciation, Arrived reports that while they can’t predict future returns, historical returns of 11.5% to 13.1% have been made from investing in rental homes.
How do I make money with Arrived Homes?
Investors make money with Arrived Homes in two ways:
- Property value growth. As an owner of an Arrived property, you may see an increase in home equity value if one of the properties you invested in appreciates.
- Rental income. You will also receive quarterly cash dividends from rental payments received from the tenants. The amount of rental income you receive will be proportional to the number of shares you own in a property.
How do I cash out with Arrived Homes?
When you invest with Arrived Homes, you should expect to stay invested for a period of 5 to 7 years. However, Arrived understands that some investors might want to liquidate their money before the end of the hold period. This is why they are currently working on a program that will allow investors to request to liquidate their shares earlier. Once this program is in place, investors will have to wait for a 6 month hold period from the time of their initial purchase. Those that are interested in cashing out early should carefully review Arrived Homes Offering Circular, as you may be subject to certain penalties depending on when the request is made.
When Arrived sells the property, you will receive your share of any appreciation.
Arrived Homes vs traditional investing
In the past, one of the main differentiating factors between investing in real estate and investing in the stock market was accessibility. Traditionally, it's been much easier for people to invest in the stock market. This is because real estate requires a much larger amount of money, expertise and time to get started. But, times are changing, and with platforms like Arrived Homes, the barrier to entry for real estate investing has been lowered in many cases.
When comparing the rate of return between residential real estate investing and equities, The Quarterly Journal of Economics reports that, on average, both provide real total gains of approximately 7% per year. Since WW2, equities have outperformed housing, but real estate is less volatile.
Where real estate investing and traditional stock market investing differ is in liquidity. Real estate tends to be less liquid. So, if you are someone who likes to trade frequently or you think you will need your money back in the short term, stock investing might be a better plan for you. However, if you have money that you can invest for the longer term, then adding real estate to your portfolio can be a great way to diversify.
When comparing Arrived Homes to more traditional stock market investing, it doesn’t have to be a matter of one or the other. Investing in both the stock market and real estate can help to create a more balanced and diversified investment portfolio. Of course, with any investment, it’s always important to do your homework and study the potential risks and rewards involved.
What other people are saying about Arrived Homes
While there isn’t a ton of talk about Arrived Homes, the ones who are talking and posting seem happy with their decision to invest.
Arrived Homes was in the news for raising $37 million in seed funding and debt financing. An article in Bloomberg was one of many to report on the billionaire backing of the startup as Jeff Bezos (Bezos Expeditions) and Marc Benioff (Time Ventures) are two high-profile Arrived Homes investors.
Are there other apps like Arrived Homes?
There are other apps that are similar to Arrived Homes. Examples of other platforms that allow you to invest in real estate and earn passive income include GROUNDFLOOR and Fund That Flip.
Like Arrived Homes, GROUNDFLOOR gives investors the opportunity to invest in residential real estate on a fractional basis while earning passive income. However, the two platforms also have several differences.
First, GROUNDFLOOR offers an even lower minimum investment than Arrived Homes starting at only $10 versus $100. Second, GROUNDFLOOR offers a shorter investment term of around 6 to 12 months versus 5 to 7 years with Arrived Homes. GROUNDFLOOR has also shown consistent cash returns of around 10% annually.
Fund That Flip provides another opportunity to invest in pre-vetted private residential real estate. Similar to Arrived Homes, investors can earn passive income. One of the differences between Fund That Flip and Arrived Homes is that Fund That Flip requires a much higher minimum investment at $5,000.
Fund That Flip is also only open to accredited investors whereas Arrived Homes offers are open to both accredited and non-accredited investors. If you are looking for a shorter-term investment, Fund That Flip provides shorter hold terms (often just a few months) versus a 5 to 7 years commitment with Arrived. With Fund That Flip, you can expect 9.5% in returns however, there is no opportunity to make money through property appreciation.
Our hot take on Arrived Homes
If you are looking for a way to get started in residential real estate investing for a low minimum cost, then Arrived Homes is definitely an opportunity that is worth looking into. For as little as $100 you can begin your real estate investment journey, and all you have to do is sit back and collect your quarterly dividend payments.
Before investing, be sure to consider how long you are willing or able to keep your money invested, as Arrived hold terms are usually between 5 and 7 years. Those looking for more liquidity might want to check out a platform like GROUNDFLOOR or Fund That Flip. Of course, as is good advice with any investment, it’s important to do your own research on the platform and weigh the benefits and risks before you invest.
I’m in! How do I sign up for Arrived Homes?
1. Join MoneyMade (for free)
Sign up for a MoneyMade account so you can track and manage all of your online investments in one convenient place.
2. Sign up with Arrived Homes
To begin, you will need to sign up for an account with Arrived Homes. Then you will be asked to provide some personal information like your name, how much you intend to invest in the next year, and how you heard about Arrived.
3. Browse rental properties
After you’ve created your account, you can begin to browse through Arrived rental properties. When you see something you like, you decide how many shares you want to invest. The minimum investment is $100.
4. Verify your identity and link your bank account
To finish purchasing your shares and fund the investment, you will need to verify your identity and link to a bank account. You will also be asked to carefully review the terms of your rental property agreement and sign the online contract.
5. Sit back and start making money
Once the transaction is complete, you can sit back and wait for the quarterly dividends to start rolling in. You can also look forward to a payout when the property is sold, providing the property has appreciated.
6. Return to MoneyMade to track all of your investments in one place.
Don’t forget to come back to Moneymade to track your Arrived Homes investments, along with all of your other investments.
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