Is Arrived a Good Investment for Your Portfolio?

Arrived is an online platform designed to make real estate investment more accessible. It offers fractional ownership in properties, allowing individuals to invest without the substantial capital typically required for a full property purchase. The platform aims to simplify the investment process, providing a pathway for individuals to participate in the real estate market. This article explores the structure and offerings of Arrived, providing information for those considering it as an investment option.

Understanding the Arrived Platform

Arrived operates on a fractional ownership model, enabling multiple investors to collectively own a portion of a single real estate asset. The platform identifies and acquires properties, which are then divided into shares for investors to purchase. Each property is placed into a separate legal entity, such as a Limited Liability Company (LLC), providing a layer of protection for investors. This structure allows individuals to gain exposure to real estate without direct landlord responsibilities.

The process begins with Arrived’s team sourcing and vetting potential investment properties using data analysis. Once a property is acquired, it is prepared for investment. Investors then purchase shares, becoming fractional owners. Arrived handles the ongoing management, aiming to generate both rental income and potential property appreciation.

Exploring Investment Opportunities

Arrived offers various real estate investments, primarily residential properties. These include long-term residential rental homes and short-term vacation rental properties. Investors can choose individual properties or diversified funds managed by Arrived.

Long-term residential rental properties are single-family homes for stable rental income. Returns come from rent payments and property appreciation. Vacation rental properties are for short-term bookings. These generate returns through nightly rental income, which can fluctuate, and potential property appreciation.

Financial Performance and Fee Structure

Investors on Arrived generate returns through quarterly rental income distributions and property appreciation upon sale. The platform provides regular income payouts from collected rent, after expenses. Property value increases also contribute to returns upon sale.

Arrived charges several fees that impact investor returns. A one-time sourcing fee (3.5% for long-term rentals, 5% for vacation rentals) covers acquisition and preparation costs and is included in the share price. A quarterly Asset Under Management (AUM) fee varies by product: 0.15% of purchase price for single-family residential properties, and 0.25% of net assets for the Single Family Residential Fund.

Property management fees are deducted from gross rental income for operational costs. For long-term rentals, this fee is 8% of gross rents; for vacation rentals, it ranges from 15% to 25% of gross rents, plus an additional 5% gross rents fee. These fees directly reduce net rental income. Certain funds may have early redemption fees: 2% for redemptions between six and twelve months, and 1% for years two through five.

Steps to Invest and Ongoing Management

Investing with Arrived begins with creating an account, which involves verification. Once established, investors link their bank account for funding. The platform provides a curated selection of properties for review.

Investors browse available properties and select those aligning with their goals. After choosing a property, they determine the investment amount, with minimums starting at $100 per property. The investment is finalized by reviewing and signing documents, and funding the share purchase.

Following investment, Arrived manages all property aspects. This includes tenant sourcing, lease agreements, routine maintenance, and rent collection. The platform handles quarterly rental income distribution and property-related expenses. Investors receive periodic updates on property performance and financial statements.

Key Considerations for Investors

Investing in real estate through platforms like Arrived involves several considerations. Real estate investments are long-term assets, with capital committed for five to seven years. Investors should align these investments with financial goals that do not require immediate liquidity.

Liquidity in fractional real estate investments is less than publicly traded securities. While some Arrived funds offer redemption options after a minimum holding period, individual property shares lack a robust secondary market. Property values and rental income are also subject to market fluctuations, which can impact returns. Economic downturns or changes in local housing demand can affect both appreciation and rental yields.

Rental income from Arrived properties is subject to federal income taxes and must be reported annually. Investors receive a Form 1099-DIV. Long-term residential rental properties and associated funds may qualify for REIT-like tax benefits, such as exemptions from corporate income tax and eligibility for the Qualified Business Income deduction. Vacation rentals are considered ‘active’ income and do not qualify for these REIT benefits. Depreciation is a common deduction that can help offset taxable rental income.