Arrived is a technology platform designed to make real estate investment accessible by allowing investors to purchase shares of rental properties. The company streamlines the complex process of acquiring and managing rental homes, providing a simplified approach to owning a portion of real estate assets. By pooling investor capital, Arrived facilitates the purchase of income-producing properties, which are then professionally managed. The platform connects individuals with investment opportunities in single-family residential homes and vacation rentals, allowing participation without the extensive capital or operational duties traditionally required.
Understanding the Arrived Investment Model
The Arrived model is founded on fractional real estate ownership, which crowdsources the capital needed to acquire properties. This structure allows a single property to be divided into numerous shares, making ownership attainable for investors with smaller capital allocations. The platform focuses primarily on acquiring single-family rental homes (SFRs) and vacation rentals across the United States. Arrived identifies, vets, purchases these properties, and then lists the available shares for individual investors to buy.
When an investor purchases shares, they become a partial owner of the specific property, holding a fractional equity stake. This ownership is passive, as Arrived retains all operational responsibilities. The platform handles tenant placement, rent collection, maintenance, and insurance.
How the Investment Process Works
The investment process begins by exploring the digital marketplace of available properties on the Arrived platform. Each listing includes detailed financial information, known as a pro forma, which outlines the expected returns from rental income and appreciation. Investors review these profiles, considering location, property type, and projected financial performance to select their investments.
The investor determines the number of shares they wish to purchase in the chosen property. The minimum investment for a single property is typically $100, lowering the barrier to entry. After selecting shares, the investor reviews the terms, electronically signs the necessary documents, and funds the investment. The property is typically held for an expected period of five to seven years before being sold, representing the investment’s holding term.
Sources of Investor Returns
Investors generate earnings through two distinct streams: rental income and property appreciation. Net rental income is distributed to investors as quarterly dividends or distributions, providing regular cash flow from their fractional ownership.
The second component is property appreciation, representing the capital gain realized upon the sale of the asset. After the holding period concludes, Arrived facilitates the sale, and any increase in value over the initial purchase price is distributed to fractional owners based on their share. Historically, total annual returns for single-family residential properties have ranged between 6% and 10%, though these figures are subject to market conditions and are not guaranteed.
Fees and Ownership Structure
The investment structure involves several fees that compensate the platform and cover operational costs. A one-time Sourcing Fee is charged upfront, typically 3.5% of the purchase price for long-term rentals, and is included in the share price. Additionally, an ongoing Property Management Fee, often around 8%, is deducted from the monthly gross rental income to cover day-to-day management.
The legal framework involves a distinct Series Limited Liability Company (LLC) for each property. This structure ensures that each property’s assets and liabilities are legally separated from others on the platform, providing a layer of protection for investors. Arrived offerings are typically qualified with the U.S. Securities and Exchange Commission (SEC) under Regulation A or D, permitting the public offering of securities to non-accredited investors.
Key Advantages of Using Arrived
The platform offers several benefits for the retail investor seeking real estate exposure.
Low Barrier to Entry
The primary advantage is the low barrier to entry, with minimum investment amounts beginning at $100 per property. This accessibility allows individuals to enter the real estate market without needing a large down payment or securing a mortgage.
Passive Ownership
The investment is completely passive, as Arrived handles all landlord duties, including maintenance, tenant relations, and financial accounting. Investors receive income without the operational time commitment associated with direct property ownership.
Diversification
The fractional model enables investors to easily achieve portfolio diversification by spreading capital across multiple properties in different geographical markets. This helps mitigate the risk associated with a single asset or local economic downturn.
Potential Risks and Drawbacks
Investors must consider several inherent risks associated with fractional real estate investment.
- Limited Liquidity: Shares are intended to be held for a long-term period, typically five to seven years. Since there is currently no guarantee of an active public trading market, investors may have difficulty selling shares before the property is sold.
- Market Risk: The value of the property and shares can decline due to economic shifts or adverse local market conditions.
- Platform Risk: Investors are reliant on Arrived’s ability to select and manage high-quality properties and secure competent local property managers.
- Vacancy Risk: Rental income is not guaranteed. If a property remains vacant or incurs significant unexpected maintenance costs, quarterly distributions will be negatively affected.