In a move that further blurs the lines between high-profile tech moguls and the real estate market, a startup called Arrived, backed by none other than Jeff Bezos, is making waves. Founded in 2021, Arrived is not your typical real estate venture; it’s on a mission to reshape how everyday Americans participate in property investments. The company is swiftly gaining attention by acquiring single-family homes and transforming them into rental properties, with an innovative twist that allows individuals to invest in real estate for as little as $100.
What is Arrived?
Arrived initially introduced a groundbreaking model where customers could purchase shares of individual homes, creating a distributed network of landlords who receive dividends from rental profits. This democratized approach to real estate investment has resonated with investors, allowing them to enter the market with minimal financial barriers.
Building on its initial success, Arrived is now taking a bold step forward with the launch of its “Single Family Residential Fund.” This new offering enables investors to diversify their portfolios by investing in a broader range of rental properties across Arrived’s holdings. Similar to a Real Estate Investment Trust (REIT), the fund requires a minimum investment of just $100, making it accessible to a wide range of investors.
Arrived’s strategic focus on single-family home rentals is underscored by the growing trend of people opting to rent rather than purchase homes. In a recent webinar, the company’s vice president of investments, Cameron Wu, explained that Arrived targets properties with current affordability and robust cash flow potential. The company, originally rooted in Fayetteville, Arkansas, has expanded its reach to Greeley, Colorado, which has “higher price points when compared to the country, but [is] more affordable when it comes to Colorado.”
CEO Ryan Frazier highlighted Arrived’s role in addressing the nationwide housing shortage. Frazier noted that the single-family home residential market has been undersupplied for over a decade, exacerbated by increasing mortgage interest rates. The company sees an opportunity to meet the rising demand for rental properties, driven by the decreasing affordability of homeownership.
“The single-family home residential home market has just been so undersupplied for more than the last decade and the supply of properties in the market is lower now … as mortgage interest rates have gone up,” Frazier said. “At the same time, interest from individuals in renting properties is also going up.”
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High-Profile Investors
Arrived has attracted attention not only for its innovative model but also for its notable investors. Jeff Bezos, former Amazon CEO, leads a group of high-profile tech figures, including Salesforce CEO Mark Benioff, Zillow co-founder Spencer Rascoff, and Uber CEO Dara Khosrowshahi, who have invested in the startup. This influx of capital from tech moguls further solidifies Arrived’s position as a disruptor in the real estate investment landscape.
Arrived’s current portfolio, with over 300 homes across various states, may seem modest compared to industry giants like Invitation Homes and Tricon Residential, boasting tens of thousands of properties. However, the startup’s rapid growth signals a broader trend in the real estate sector. As mortgages become increasingly inaccessible for everyday buyers, companies armed with significant investment capital are stepping in to assume landlord duties, effectively reshaping the landscape of homeownership.
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Criticisms and Concerns
Despite its innovative approach, Arrived has faced criticisms, particularly regarding its impact on the housing market. By converting single-family homes into rental properties, the company is contributing to reducing the available supply for potential homebuyers. This critique has been a longstanding concern directed at private equity-funded single-family home purchases, a trend that has surged since the onset of the pandemic.
The Future of Real Estate?
Looking ahead, industry projections suggest that investors could constitute a substantial portion of the single-family home market by 2030. According to Yardi, a company investing in single-family homes, the total share of investor-owned single-family homes was around 5 percent as of 2022. However, this figure could surge to 40 percent by 2030, marking a substantial shift in the dynamics of property ownership.
