Arrived
Strengths
- Invest in real estate with as little as $100
- Accredited investor status is not required
- Expected annualized returns can be 10% or more
- Truly passive investment
Weaknesses
- Limited number of properties available
- No early redemptions
In 2012, Warren Buffett famously said that if there was an easy way to buy a couple hundred single family homes, he’d do it. The downside was management – it’s extremely difficult.
And with soaring real estate prices (tempered, recently, by interest rates), coming up with down payments is extremely challenging too.
If you want to invest in this asset class, there are very few options. There aren’t any convenient REITs that focus on this because it’s such a labor intensive process.
If you’re like many would-be real estate investors, you may be stuck watching the action from the sidelines. But a real estate crowdfunding platform, Arrived, offers the chance to invest in single family homes using the crowdfunding model. You don’t have to come up with an entire down payment – you can diversify your investments with just a hundred bucks.
If you’ve been looking to add single family homes into your investment portfolio, Arrived might be a good option.
Table of Contents
🔃Updated April 2024 with their latest offerings and platform changes. This includes the addition of a Single Family Residential Fund, which a portfolio of individual holdings, as well as other changes.
What Is Arrived?
Arrived is a real estate crowdfunding platform where you participate in investments in single-family residential properties. The company was founded in Seattle, Washington, in June 2019. Arrived enjoys an A+ rating with the Better Business Bureau, the highest on a scale of A+ to F. While it’s debateble whether a high BBB rating means anything, the fact that there haven’t been a large number of complaints in the last four years is a good sign.
(Arrived was formerly known as Arrived Homes, they dropped the “Homes” in their name in January of 2023)
Arrived serves as a crowdfunded, online real estate investment marketplace. You can purchase shares in individual properties for as little as $100. They provide a list of current and previous properties, and you can choose from any that are currently available.
The low barrier to entry means you can diversify your investment across multiple properties – which is important when it comes to single family homes.
Like all real estate platforms, Arrived says that they pick investment properties using a data-driven decision-making process where they collaborate with local real estate experts. They vet each property and while they can produce passive income, the objective is property value appreciation.
Properties offered for investments are primarily along the southern tier of the United States. The largest concentrations are in Georgia, Alabama, Tennessee, and the Carolinas.
As an investor, all you need to do is contribute money. Arrived handles the transaction itself – property selection and acquisition, renovations, tenant and property management, and eventually the sale.
You might notice that in the image above, and if you visit the Arrived site, the top left image is for a fund. They also offer a fund that holds multiple properties – it’s called the Single Family Residential Fund. It holds 28 properties in 17 markets – a total of $11.1 million in assets. With these funds, there is liquidity (you can redeem shares after 6 months) if you’re willing to pay a cost (1-2% if redeemed within 5 years).
Arrived Features
The following list of key features will help you decide if Arrived is suitable for you. You can join other crowdfunded real estate platforms. Further down, I’ll cover some of the alternatives, like Fundrise and Yieldstreet.
- Invest in single-family investment properties
- The minimum investment is between $100 and $20,000, depending upon the property.
- You don’t have to be an accredited investor to invest.
- Open to individuals, specific entities, or (pending) self-directed IRA accounts (SDIRAs) that can accommodate alternative investments like direct property ownership.
- Income distributed quarterly
- Income reported via IRS Form 1099-DIV
- Early redemption is not permitted, but the company is working on a plan to accommodate early liquidations of shares at a future date.
- Phone and email customer support during business hours.
How Does Arrived Work?
As mentioned earlier, Arrived serves as an online real estate marketplace for investment properties. Arrived Homes, LLC sponsors the investments offered on the platform and sells shares through securities offerings under Regulation A of the Securities Act of 1933.
When I signed up for the platform, they were offering their 100th property investment. It was the only one available at the time – they had already fully funded the other 99. That’s remarkable for a company in business for only two years.
The property offered iss located at 2119 Herman Street, Nashville, Tennessee.
The detail provided on the property was impressive. Arrived indicated the amount of the first dividend payment, the expected payment date (July 2022), and the first year dividend yield (3.6%).
The positive dividend yield itself is an encouraging sign. Finding properties with a positive cash flow is challenging in today’s high-cost and high interest rate real estate market. But once again, Arrived concentrates their investment activities in areas of the country where expect this type of result.
In addition, Arrived carefully screens prospective tenants and rents their properties with two-year leases. The combination creates increased rental income stability by reducing tenant turnover.
Arrived Returns
The above screenshot contains the annual dividend and the historical property appreciation. With a property equity return of 7.2% and an annual dividend of 3.6%, Arrived expects this property to return 10.8% yearly if held until disposition.
Next, Arrived provides details of the offering. That includes the property’s purchase price, improvements, cash reserves, closing costs, offering costs and holding costs, and the one-time Arrived service fee (covered below).
In the screenshot above, Arrived discloses the price per share, which is $10, and the total shares offered (70,580).
The same table indicates the expected hold period of the property, which is between five and seven years. But also notice in the middle of the screenshot, Arrived will finance the investment entirely with equity raised from investors. That means no loan on the property, therefore no debt service or interest expense.
The company also discloses other details, including the use of the proceeds raised, the series overview, risk factors, and provides the offering circular.
Arrived vs. REITs
Arrived itself is not a real estate investment trust but each investment property is set up as one – they are structured and taxed as a Real Estate Investment Trust (REIT).
At least one purpose for this investment structure is to avoid the Unrelated Business Tax (UBIT) for investments held in self-directed IRA accounts.
Arrived Pricing
The Arrived online marketplace is free to use for browsing, investigating, and selecting properties you want to invest in.
There are fees when you invest in real estate:
Arrived Sourcing Fee (one-time)
Arrived collects two fees on each investment – the first is the one-time Arrived Sourcing Fee.
According to their FAQ, the fee is based on the asset class:
- Long Term Rentals – 3.5% of the property purchase price
- Vacation Rentals – 5% of the property purchase price
The Arrived Sourcing Fee is the fee charged by Arrived for acquiring the property and preparing it for investment. The result is included in your per share investment and does not represent an additional cost.
Arrived Asset Management Fee (quarterly)
The second fee is the Asset Management Fee – a quarterly fee based on the initial equity raised from investors. The fee is paid out of rental income from the property and covers the cost of managing the investment.
- Long Term Rentals – 0.15% of the property purchase price (quarterly)
- Vacation Rentals – 0.125% of the property purchase price (quarterly)
Vacation Rentals also pay a Gross Rents Fee of 4% of gross revenue.
Agent Rebates
The company discloses a third fee, which investors do not pay. They refer to this as Agent Rebates. When Arrived purchases a property from the original seller, they collect a real estate agent fee from the seller – also known as the Agent Rebate.
Arrived Fund Fees
The Single Family Residential Fund has a slightly different structure since it’s not a single property but a portfolio of properties.
First, there are all the fees that are part of the offerings themselves – “Other potential fees and expense reimbursements incurred by the Arrived Single Family Residential Fund may include but are not limited to closing costs, offering costs, property renovation costs, sourcing fees, holding costs, operating expenses, financing, legal, & property management expenses.” These are related to the acquisition and operation of the properties in the fund.
Next, there is an asset management fee of 1% – taken as 0.25% every quarter.
There is also a redemption fee if you redeem your shares (sell them) within 5 years of investing. The fee is:
- Redeem after 5 years – 0%
- Redeem within 1 – 5 years – 1%
- Redeem within 6 months – 1 year – 2%
- Redeem within 6 month – not permitted
How to Sign Up with Arrived
Arrived is free to sign up. If you have any interest in this asset class, it makes sense to sign up so you can take a look at the investment options yourself.
To sign up with Arrived, you must be a US citizen or resident and 18 years old. Unlike some real estate crowdfunding platforms, Arrived doesn’t require you to be an accredited investor to participate.
Once again, Arrived is free to sign up for browsing properties. You need to provide your full name and email address, and you can begin taking advantage of the platform.
Once you decide on a property, you’ll choose how much you want to invest. You will then review the contract terms and sign it if everything is agreeable.
You’ll need to link your bank account to Arrived to fund your investment. But the same bank account can be the destination for the quarterly dividends earned on your investment. You can link only one bank account per Arrived account.
Arrived Pros & Cons
Pros:
- Opportunity to invest in real estate with as little as $100.
- Spread your investment across multiple properties for maximum diversification.
- You don’t need to be an accredited investor.
- Arrived designs investments to provide current income – a quarterly rental dividend – and long-term capital appreciation.
- Arrived maintains a 2% cash reserve on each investment property to cover unexpected expenses or rental vacancies.
- Expected annualized returns on properties held to completion are greater than 10%.
- It’s an entirely passive investment.
Cons:
- A limited number of properties are available
- Low liquidity on direct investments – average 5 to 7-year investment duration and no early redemptions
Arrived Alternatives
Yieldstreet
Yieldstreet offers real estate investments, but you can also diversify beyond real estate on the platform. They can accommodate accredited and nonaccredited investors, allowing you to invest for income, growth, or both. Investments include real estate, structured notes, short-term notes, legal finance, venture capital, crypto, and other asset classes. It’s an excellent choice if you’re looking to diversify your portfolio on a single platform. The company claims a net annualized return of 9.71%. The minimum investment is between $2,500 and $5,000. Learn more in our Yieldstreet review.
👉 Learn more about Yieldstreet
Fundrise
Fundrise is the best choice in real estate crowdfunding platforms for beginners since you don’t need to be an accredited investor, and you can begin investing with as little as $10. Investors also love the diversified investment options Fundrise has to offer. For example, you can invest in their eREITs for just $10 and eventually trade up to more sophisticated investment choices. They offer five different plans, each with its mix of risk and reward. Check out our full Fundrise review for all of the details.
We earn a commission from Fundrise partner links on WalletHacks.com. We are not a client of Fundrise. All opinions are my own.
Arrived Review: Final Thoughts
Arrived is an excellent choice if you feel spooked by the recent decline in the financial markets and would like to expand your portfolio to include a more stable asset class, like real estate. You don’t need to be an accredited investor – you can begin investing with as little as $100 and spread a small amount of money across multiple properties.
They’ve now been in business for four years and the track record remains pretty strong. They’ve now funded $128 million in property value across 60 markets. Over 368 properties funded in four years. In the first 2 years, they funded a hundred properties so they’ve really accelerated.
What’s also impressive is they list the returns of their properties – whether they did well or have not done well. It’s a list of all their properties (I assume, the list is 324 properties as of April 2024)!
The combination of net rental income – paid quarterly – and long-term capital appreciation can produce double-digit returns. That is a welcome addition to any portfolio.
