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Nearly 43 million homes in the United States are occupied by renters, making rental property investing an evergreen income opportunity.
The problem is that, traditionally, rental property management is anything but passive. When you factor in the upfront costs, the potential for ongoing maintenance issues, and time spent dealing with tenants, rental property investing can quickly become a profit-sucking endeavor.
But what if there was a way to earn passive income from rentals without all of the hassles?
Arrived Homes lets you do just that. Using the service, you can purchase shares of rental properties and let someone else handle the tricky stuff so you don’t have to.
In this post, I’ll explain how Arrived Homes works and how you can get involved with the service. To start, let’s take a closer look at what Arrived has to offer.
Pros
- Low start-up cost
- No membership fees
- Easy way to try rental property investing
- Available to non-accredited investors
Cons
- Suited for long-term investments only
- You can probably find better ROI in the stock market
- No mobile app
- No sign-up bonus
What is Arrived Homes?
Arrived Homes is an online platform that crowdsources capital to buy rental properties. It was founded in 2019 and has since secured $37 million in funding. The company is headed up by CEO and co-founder Ryan Frazier and is based out of Seattle.
Arrived users can buy fractional shares of individual rental homes and earn money over time through rental payments and home appreciation.
How Arrived Homes Works
The overall goal of Arrived is to serve as an easy entry point for investing in rental properties. After all, not everyone has the resources needed to buy a property outright and rent it out from there.
Here’s how it works: When you sign up, you can browse through available properties that are open to new investors. Each one is pre-vetted for income potential, so you can rest assured that you’re not buying into any garbage dumps.
When you find a property (or several) that you like, you can determine how much you’d like to invest, and Arrived will reserve those shares on your behalf. At this point, you sign an online contract and link your bank account to make your initial investment.
From there, you can take it easy and enjoy a truly passive income stream. Arrived takes care of property management and assumes all liability, so all you have to do is sit back and watch your investment grow.
Arrived Homes Features
Low Minimum Investment
Arguably the best aspect of Arrived Homes is that it gives investors of all income levels the chance to own a piece of a condo, single-family home, vacation rental, or any other type of residential real estate property.
To get started, all you need is a minimum investment of $100. Of course, there’s a direct correlation between how much you invest and how much you stand to earn. But with such a low barrier to entry, Arrived makes it easy to get your feet wet and learn the ropes.
Cash Dividends
Arrived pays out cash dividends to its investors. Based on past performance, this typically translates to returns between 5.21% and 6.42% per year. Investors also earn revenue as the property value appreciates, though these returns are a little tough to predict.
To help project the value of your shares of rental properties, Arrived comes with a Property Investment Calculator that uses historical industry data to identify trends.
Real Estate Investing Guide
Arrived also offers its Real Estate Investing Guide to help you understand how to start investing effectively. The guide covers both the how and the why of real estate investments and sets you up with helpful tips for maximizing your returns.
Arrived Homes Pricing and Fees
It’s free to sign up for Arrived, and there are no membership or subscription fees for using the platform. While the cost of your investment will be the most expensive aspect of using Arrived, there are some other costs to consider.
Here’s the full breakdown of what you can expect to pay if you decide to use the service.
Initial Investment
As mentioned above, you’ll need an initial investment of at least $100 which you can transfer over from a linked bank account. Arrived is also working on adding the ability to fund your investment through a self-directed IRA, but this is still in progress.
Sourcing Fees
Arrived charges a sourcing fee for each property that covers the costs of locating and preparing it for investment. It’s a one-time fee and the amount varies for each property. Either way, you’ll be able to see exactly what those fees are in the Offering Details section of a listing.
Annual Asset Management Fees
Arrived also comes with an Annual Asset Management (AUM) fee, which helps cover the cost of the ongoing management of the property. Like the sourcing fee, this expense varies depending on the specific property. Again, you’ll know precisely what it is ahead of time, so there won’t be any surprises.
Taxes
As with any investment, the money that you earn with Arrived is classified as taxable income by the IRS. Arrived will send your relevant tax information at the end of the year, and it’s your responsibility to report it on your return and settle up with Uncle Sam.
Early Liquidation Fees
Arrived recommends that investors buy in for the long term, from three to seven years. If you need to liquidate your shares early, you have the option to sell them to other investors after the initial six-month holding period.
However, if you take this route, you could be on the hook for transaction fees. That’s because Arrived doesn’t handle secondary market transactions.
In other words, Arrived is not a platform for flipping quick returns. Keep this in mind as you plan out your strategy.
Signing Up and Getting Started
To sign up for Arrived, you need to be at least 18 years old and a U.S. citizen. The platform is built for everyday investors, so you don’t need to be an accredited investor to qualify.
Creating your account on arrivedhomes.com is quick and simple. All you need to get started is an email address and your full name.
From there, you need to set up your investment account, which requires more information for identity verification purposes. You can choose to set up either a personal or LLC account, and you need to have your Social Security or Tax ID number on hand.
The next step is to link your bank account for funding. Arrived connects with most major institutions, so you shouldn’t have any trouble connecting yours.
Once everything is set up, it’s time to start picking out investment properties. For each option, you’re able to see how many investors there are and how close it is to full funding.
Get Started With Arrived Homes
At the time of writing, Arrived isn’t offering any sign-up or referral bonuses for new customers. If any opportunities come up in the future, I’ll be sure to keep you updated.
Arrived Homes Security
Arrives operates on a secure platform that safeguards your personal and financial information. All data is encrypted and bank transfers are handled through Plaid, a reputable third-party financial technology platform.
Additionally, Arrived keeps you protected from any personal liability concerning your property shares. Each home is owned through an LLC, so shareholders aren’t held responsible if something goes wrong.
Customer Service and Support
Arrived offers a few different customer support options when you need help with your account.
Its online Help Center is full of how-tos and FAQs that cover most basic account needs. If you do need to speak to someone, you can reach out through online chat. But it could take a couple of hours to get a response.
Personally, I prefer speaking to people in real-time—and you can do that, too. Contact options include scheduling a phone call, Zoom conference, or Google Meet with someone from the Arrived team.
Overall, investors seem to be pretty happy with the level of service they’re getting from the company. Arrived is still relatively new, but it’s already earned an A rating from the Better Business Bureau (BBB).
Pros and Cons of Arrived Homes
Pros
- Low start-up cost
- No membership fees
- Easy way to try rental property investing
- Available to non-accredited investors
Cons
- Suited for long-term investments only
- You can probably find better ROI in the stock market
- No mobile app
- No sign-up bonus
Now that you have a better idea about the pros and cons of Arrived Homes, let’s review some of the platform’s most popular competitors.
Alternatives to Arrived Homes
Fundrise
Fundrise is a crowdfunding real estate platform that allows users to invest in commercial property portfolios. Like Arrived, Fundrise investments are considered long-term.
The main difference between Fundrise and Arrived is the type of investments you can select. Rather than letting investors pick individual properties, Fundrise focuses on diversification and disperses investments across a portfolio of properties. You’ll also need $500 to open an account versus $100 with Arrived.
Groundfloor
Groundfloor is a crowdsourced real estate investment platform that focuses on short-term, high-yield returns.
The platform is extremely accessible with a minimum investment of just $10 and might be a better fit for those looking for a quick turnaround on rental income.
DiversyFund
DiversyFund is similar to Arrived but has a slightly higher barrier to entry at $500. It offers diversified investments and REIT funds.
DiversyFund is an interesting option for those who prefer a more hands-off approach, as the platform is 100% automated.
Frequently Asked Questions
How Does Arrived Homes Make Money?
Arrived makes money through a variety of fees, including an Agent Rebate, which the previous owner of a purchased property covers. It also charges a Sourcing Fee and an Annual Asset Management Fee to its investors.
Does Jeff Bezos Invest in Arrived?
Yes. Bezos’s private investment firm, Bezos Expeditions, was a contributor to Arrived’s latest round of fundraising.
Is Arrived Homes Legit?
Yes, Arrived Homes is a legitimate investment platform that helps everyday investors purchase shares of rental properties.
Learn More:
The Bottom Line
Arrived Homes allows you to get into the real estate investing game with as little as $100.
That being the case, Arrived might be the perfect solution for those with an itch to invest in single-unit rental properties that don’t want the responsibility that comes with sourcing and managing their own units.
However, it’s important to keep in mind that Arrived is not going to produce short-term returns. If you don’t have the flexibility to sit on your portfolio for several years, it probably isn’t the right service for you. Then again, it’s almost impossible to flip quick profits with real estate investments.
Either way, now that you know what Arrived brings to the table, you’re one step closer to elevating your personal finance situation. Whether it’s through crowdfunded real estate, traditional stock market investing, or a mix of both—here’s to making that happen.