Welcome to Arrived’s Q2 2024 review! Let’s review the dividends and appreciation ranges of the 404 Arrived properties operating during Q2 2024.
In Q2 2024, investors earned more than $1.2M in dividend income, an increase of approximately 8.7% from Q1 2024. In total, 366 individual properties paid out annualized dividends. In Q2 2024, single family residential properties earned an average 4.1%. Vacation rental homes earned an average 3.3%.
The Arrived Single Family Residential Fund earned a 4% annualized dividend. The Arrived Private Credit Fund earned an 8.1% annualized dividend.
Product Updates
In Q2 2024, Arrived launched the Arrived Private Credit Fund. The fund strategically allocates capital into short-term loans financing real estate projects, including renovations, rehabs, and new home constructions. Managed by experienced real estate industry professionals, this fund provides the potential for high yields secured by residential housing.
Arrived rolled out a new portfolio layout and navigation improvements, making it easier for you to digest information across our various product lines. Our goal is to streamline your access to information, enabling more efficient management of your investments.
Additionally, we have improved offering history accessibility. You can now view more detailed data about your properties directly from the portfolio page, including comprehensive property timelines for vacation rentals, previously only available for single family residential properties.
Arrived also introduced Single Family Residential Fund redemptions, allowing you access to liquidity for your Single Family Residential Fund investments. This new feature provides greater flexibility and control over your investments.
Dividends
Dividends earned can vary by investment. In Q2 2024, 248 individual single family residential properties paid an annualized dividend between 1.2% and 8.9%*, with a 4.1% average. 37 vacation rentals paid an annualized dividend between 2.0% and 5.7%, with a 3.3% average. The Arrived Single Family Residential Fund paid an annualized dividend of 4%. The Arrived Private Credit Fund generated income resulting in an annualized dividend of 8.1% paid in July.
You can view the dividends for each individual property on our Historical Returns page.
The annualized dividend for each individual property is calculated by taking the Q2 dividend and extrapolating it out for an entire year. Building a diversified portfolio across multiple markets can be a great strategy to minimize concentration risk while getting exposure to different real estate markets and earning passive income.
The chart below shows the combined realized dividends and unrealized appreciation of single family residential properties and vacation properties.
It's evident that properties may have lower total returns in the first six months because they have only received dividends and don't have an appreciation update yet. Historically, rental property investments have performed best when held for the long term.
This chart illustrates the potential benefits of diversification and dollar-cost averaging in the real estate market. Diversifying your portfolio by investing in a mix of single family residential properties, vacation homes, and both debt and equity products, such as the Arrived Private Credit Fund and the Arrived Single Family Residential Fund, can be an effective strategy for mitigating risk.
In Q2 2024, 39 properties in the Arrived Single Family Residential Fund paid a dividend. The Arrived Single Residential Fund earned an average annualized dividend of 4% in Q2 2024.
The Arrived Private Credit Fund earned income in Q2, leading to its inaugural dividend payment in July at an 8.1% annualized rate. More than $6M was invested in the Arrived Private Credit Fund in Q2 2024. The Arrived Private Credit Fund added 15 new loans in Q2 2024.
*The dividend range does not include properties that did not receive a monthly dividend due to specific circumstances, such as vacancies, eviction proceedings, significant maintenance issues impacting the property’s cash flow, or properties that were not yet earning rental income. Any operating income for these properties will be added to the property’s cash reserves and distributed at a later dividend date. See the individual property pages for any updates on the current status.
Share Prices
In Q2 2024, 343 Arrived properties received an updated share price estimate. Among those, 285 operating properties received an updated share price, while 60 properties received their first share price update.
Share Prices are a way to see the value of your investment change over time, much like you would track a portfolio of stocks.
A property’s share price reflects both the estimated value of the property and its cash balance. Any actions that affect the cash balance will impact the share price. This could include revenue, vacancy, dividends paid, and operating expenses. For individual property offerings, the share price is unrealized until the disposition of the property. You can learn more about how share prices are calculated in our FAQ.
Single Family Residential Property Share Prices
In Q2 2024, we updated the Share Prices for 310 properties, including 261 properties receiving an updated share price from 3 months ago and 49 properties receiving their first share price since their IPO 6-9 months ago.
The Arrived Single Family Residential Fund received a $9.97 share price, remaining consistent with Q1 2024.
For the 261 single family residential properties receiving an updated share price, the quarterly share price change ranged between -18.1% and 12.5%. That resulted in an average share price change of +0.3% from Q1 2024 to Q2 2024.
For the 49 properties receiving a share price for the first time, share prices ranged between -4.3% and 9.2%. That resulted in an average share price change of -0.2% since their IPO 6-19 months ago.
The share price range reflects the low, high, and average range for all Arrived single family residential properties. This range may reflect individual properties impacted by specific circumstances, such as eviction proceedings or significant maintenance issues affecting the property's cash flow.
Single family residential investors can view the performance of individual properties in their portfolio on their Portfolio Page. Investors can also view the offering history of all single family residential properties under the “Performance” section on the Property Page.
Vacation Rental Property Share Prices
In Q2 2024, we updated the Share Prices for 34 vacation rental properties, including 23 properties receiving an updated share price from 3 months ago and 11 properties receiving their first share price.
The average share price change for the 23 properties receiving an updated share price was -0.1%. The average share price for the 11 properties receiving a share price for the first time was -4.2%.
You can learn more about how vacation rental share prices differ in our FAQ.
The above-mentioned share price range may contain individual properties affected by specific circumstances, such as a shift to a new property management partner.
The share price range reflects the low, high, and average range for all Arrived single-family residential properties. This range may reflect individual properties impacted by specific circumstances, such as eviction proceedings or significant maintenance issues affecting the property's cash flow. Additionally, leveraged properties can experience greater impacts from these factors, making returns more volatile and amplifying both potential gains and losses.
While share prices react to the current market in the short term, real estate performs best as a long-term investment, all while investors continue earning dividends through rental income.
*Share Prices for single family residential properties are updated six months after the initial property funding, using estimates provided by third-party sources. Vacation rental properties are updated 12+ months after initial funding and every quarter thereafter.
Understanding Unrealized Negative Appreciation: Real Estate Is a Long Term Investment
When considering rental share prices, it's crucial to understand the high initial costs and longer ramp-up time needed to increase the potential for strong income performance.
In the early stages of investing in a single family residential property, macroeconomic factors such as prevailing mortgage rates, the strategic use of leverage, and the prevailing market prices of homes can significantly impact initial total returns.
This process follows the investment J-curve pattern. Larger upfront investments in things like property improvements can be accompanied by initially lower dividends or share prices. This initial dip represents the low point of the J-Curve. As the property stabilizes, returns can increase, reflecting the growth period of the curve. It's important to remember that real estate tends to perform best as a long-term investment, allowing investors to navigate through various market cycles and maximize the potential for returns.
Operational Performance
Single Family Residential Stabilized Occupancy
Arrived closed Q2 2024 with a stabilized occupancy rate of 92.5%* for the single family residential properties in operation during the quarter. This was helped by 72 new leases started in Q2. It’s also worth noting that the average term on these 72 leases was 20 months, and 66% leased above our forecasted rent.
*Stabilized Occupancy includes homes that are occupied or are 90+ days rent-ready from their initial improvements (single family residential properties only). A property may be removed from stabilized if significant impairment outside of the ordinary course of operations requires material action for an extended period.
Vacation Rental Performance
As of the end of Q2 2024, we have 38 bookable vacation rental properties. Here are some highlights from the quarter for this asset class:
- $740,000 gross booking revenue across all operational vacation rentals in Q2*
- 25 total vacation rental markets as of Q2 2023
- Q2 2024 ended with an average guest rating of 4.9 out of 5.0
*Our guest rating is a weighted average for all bookable vacation rentals from the property’s bookable date to the end of Q2 2024.
*These figures include only stabilized IPO properties. All figures are unaudited and subject to change.
In Q2 2024, 38 vacation rentals were in operation. The gross booking revenue and average guest rating for each rental are below. Gross booking revenue is reported before any deductions for the property management fee, operating expenses, and repairs and maintenance expenses.
Arrived Single Family Residential Fund Occupancy
Arrived closed Q2 2024 with a stabilized occupancy rate of 97%* for the single family residential properties in operation in the Arrived Single Family Residential Fund during the quarter. This was helped by 13 new leases started in Q2.
Closing Thoughts By Arrived VP of Investments, Cameron Wu
As we close this quarter, it's important to acknowledge the macro trends shaping the real estate market. Shifting winds in supply and demand are evident as the consumer price index declines and inflation cools.
Current treasury market rates suggest a strong likelihood of a Federal Reserve rate cut by September, potentially lowering mortgage rates and boosting demand. However, supply is increasing slowly due to ongoing affordability issues, keeping prices relatively flat for the rest of the year.
In the rental sector, we've had a busy leasing and move-out season in Q2 2024, increasing our average occupancy to nearly 93% from 89% in Q4 2023. While occupancy dipped at the end of June due to lease expirations, we anticipate continued improvement, with few expirations until February 2025. This strategic timing ensures we regain properties during optimal leasing periods in Spring and Summer.
The launch of our Arrived Private Credit Fund underscores our commitment to leading in residential real estate investments, offering diverse opportunities to achieve your financial objectives.
Amid the evolving real estate market, we stay optimistic and dedicated to providing outstanding investment opportunities with Arrived.
