Is Arrived Worth It for Real Estate Investing?

Arrived offers an online platform enabling individuals to invest in rental properties through a fractional ownership model. The platform provides a streamlined marketplace where investors can acquire shares in income-generating real estate assets. This approach aims to democratize access to real estate investing, traditionally a capital-intensive endeavor. Investors can participate in potential rental income and property appreciation without undertaking direct property management responsibilities.

How Arrived Works

Arrived operates on a fractional ownership model, allowing multiple investors to collectively own a portion of a single property. Investors purchase shares, typically starting from $100, representing their equity stake in a specific residential rental or vacation rental property. The platform primarily offers single-family homes and vacation rentals, with options also available through diversified funds. Properties are selected in promising markets, considering appreciation potential, strong cash flow, and desirable neighborhood attributes, often targeting homes built within the last decade with three to four bedrooms.

Arrived undertakes the entire process, including property sourcing, vetting, acquisition, and ongoing management. The company leverages data analytics and technology to identify suitable properties and manage operations efficiently, ensuring properties align with strong cash flow potential and favorable tax environments. This comprehensive service provides a passive investment experience, removing burdens associated with direct property ownership, such as tenant relations, maintenance, and unexpected expenses. Arrived works with professional property managers to vet and manage tenants, oversee renovations, and handle day-to-day operations like repairs and damages, simplifying landlord responsibilities.

For each property, Arrived establishes a Special Purpose Vehicle (SPV), typically structured as a Limited Liability Company (LLC). This legal entity holds the title to the specific property, isolating its assets and liabilities from Arrived’s broader operations and other properties. Investors do not directly own the physical property; instead, they own shares in this dedicated SPV LLC, which functions as a distinct legal entity with a limited purpose clause, restricting its actions to owning that specific property.

The use of an SPV LLC offers liability protection for investors, as their personal assets are generally separated from any liabilities of the property-owning entity, making the SPV “bankruptcy remote” from Arrived itself. This structure also simplifies administrative tasks and allows for the pooling of capital from multiple investors for a single investment. Income or losses generated by the property are distributed to investors in proportion to their ownership stakes, providing a direct pass-through of economic benefits and potential tax advantages like depreciation.

Getting Started with Arrived

To begin investing with Arrived, individuals first create an account on the platform. Eligibility requires being at least 18 years old and residing in the United States, as Arrived’s offerings are structured under Regulation A+ to allow participation from both accredited and non-accredited investors. The registration process involves providing personal information, including a social security number or tax identification number, to comply with financial regulations.

This process includes Know Your Customer (KYC) and Anti-Money Laundering (AML) regulations, which mandate verification of investor identity to prevent illicit financial activities. The platform integrates with financial technology partners for secure data handling and transfers.

Once an account is established and verified, investors can fund their accounts. The primary method for funding is typically through linked bank accounts via Automated Clearing House (ACH) transfers, allowing for the seamless transfer of funds for investments. Arrived also supports investments through self-directed individual retirement accounts (IRAs), though certain property types like short-term vacation rentals may have IRS restrictions for IRA investments.

Arrived offers minimum investment amounts as low as $100 per property. Investors can allocate more capital per property to build a diversified portfolio. This flexibility allows individuals to start small and gradually increase their real estate exposure across multiple properties and markets, managing overall portfolio risk.

Investing and Managing Your Portfolio

Once an account is funded, investors can browse available properties on the Arrived platform. Each property listing provides detailed information to aid investment decisions, including its location, property type, projected returns, and investment timeline. These details often include financial projections such as estimated rental income and potential appreciation, along with a breakdown of associated fees.

The process of making an investment commitment involves selecting a desired property and specifying the amount to invest. Investors review offering documents and terms, including the projected hold period, before purchasing shares. Funds are then allocated from the investor’s funded account to the chosen property, and the investment is complete once the property is fully funded by all investors.

Rental income distributions are typically handled quarterly, providing consistent cash flow to investors. The amount of the dividend is proportional to the size of an investor’s share in the property. These distributions are net of operational expenses and platform fees, ensuring investors receive their portion of the property’s profitability, often reflecting an annual return from dividends alone.

Operational expenses, such as property taxes, insurance premiums, utilities, and routine maintenance costs, are deducted directly from the rental income generated by the property. Arrived charges various fees, including a one-time sourcing fee for acquiring and preparing the property, which is included in the initial share price. There is also an ongoing Assets Under Management (AUM) fee, paid from the property’s income.

For vacation rentals, an additional gross rents fee and higher property management fees apply due to their more intensive management requirements. These fees cover Arrived’s services, including preparing tax forms, distributing dividends, managing insurance, and overseeing third-party property managers, as well as covering potential vacancy periods. Any cash reserves collected from share sales beyond the property cost are held to cover potential vacancies or unexpected repairs, with investors retaining ownership of these reserves.

Investors can access their investment statements, performance reports, and necessary tax documents through their online dashboard. For tax purposes, investors receive a Form K-1 annually, which reports their share of the SPV LLC’s income, deductions, credits, and other items. This enables investors to claim applicable tax benefits, such as depreciation, mortgage interest deductions (if leveraged), and operating expenses, proportional to their ownership interest.

Investment Liquidation and Exit

The primary method for investment liquidation on Arrived is through the sale of the underlying property. Arrived aims for a target holding period of five to seven years for properties, aligning with the long-term nature of real estate investments. Once a property is sold, the proceeds are distributed to investors based on their proportional ownership, after the deduction of any outstanding property-related expenses, selling costs, and platform fees. This distribution includes their share of the initial investment plus any appreciation in the property’s value during the holding period.

Arrived has also introduced a secondary market feature, offering investors more flexibility to exit before the property’s full liquidation. Investors can list their shares for sale on this marketplace. This feature allows for potential liquidity, though it depends on finding a willing buyer and is not guaranteed. This option provides an avenue for investors who may need to access their capital sooner than the typical property sale timeline.