Welcome to Arrived’s Q1 2023 review! This article will review the occupancy, dividends, and appreciation of the 203 Arrived properties operating during Q1 2023.
In Q1 2023, investors earned more than $600k in dividend income, an increase of approximately $70k from Q4 2022. In total, 203 properties paid out dividends with annualized yields ranging from 2.0% to 8.5% on long-term rentals and 3.7% to 15.1% on short-term rentals.
Arrived closed Q1 2023 with a stabilized occupancy rate of 93% for the 203 long-term rental properties in operation during the quarter – this was helped by residents moving into 37 properties in Q1. It’s also worth noting that the average term on these 37 leases was 21 months, and nearly 68% leased above our forecasted rent.
When investors purchase a property, it’s often right after Arrived has identified and acquired the home. From the IPO date, properties go through an improvements process, where our team will do value-add fixes and add items like fences. For that reason, properties are typically vacant for at least a few weeks after IPO.
You can view the dividends for each individual property on our Historical Returns page.
The annualized dividend for each property is calculated by taking the Q1 dividend and extrapolating it out for an entire year.
Building a diversified portfolio across markets is a great strategy to get exposure to different real estate markets and start earning passive income.
Below is a visualization of the current annualized dividend across all of our properties mapped over the number of months owned.
Share Prices and the Current Market
Share Prices are a way to see the value of your investment change over time, much like you would track a portfolio of stocks.
In Q1 2023, we updated the Share Prices for 156 properties, which includes 121 properties that are receiving an updated share price from 3 months ago, as well as 35 properties receiving their first share price since their IPO 6-8 months ago.
For the 121 properties receiving an updated share price, we found that 35% of properties decreased, while 65% increased in share value this quarter. That resulted in an average share price increase of 1.8% in Q1.
For the 35 properties receiving a share price for the first time, we found that 30 out of 35 properties are valued below their initial offering amount, with an average decrease in Share Price of 3.3% for those 35 properties. The reason these two cohorts show different appreciation figures is that for the former group (the 121 properties), we are only measuring a 3-month change, while the latter group (35 properties), we are measuring the change from IPO (which ranges between 6-8 months).
We see some interesting insights if we take a step back from the Q1 changes and look at the total share price performance since inception. We found that across the 156 properties with share prices, 63% have had their share price valuation increase since the initial offering, while 37% have seen their share price valuation decrease.
The average drop in Share Prices that experienced a decline from IPO to date is 5%, with a slightly lower median Share Price drop of 4%. The property with the maximum Share Price decrease was 23%, emphasizing the significance of investing in multiple homes and markets to diversify your portfolio.
On the other hand, for the Share Prices that increased, the average rose by a healthy 20%, while the median Share Price also saw a significant increase of 18%. However, the maximum share price increase was the most notable performer, which grew by an impressive 101%. Again these share price changes are not just for Q1 but for all time.
These positive signals serve as a reminder that, 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.
You can find below the average Q1 Share Price categorized by the number of months owned for each property.
Vacation Rental Performance
As of the end of Q1 2023, we have 16 bookable short-term rental properties, 10 of which became bookable during the quarter. Here are some highlights from the quarter for this asset class:
- 522 nights stayed by guests
- Owner’s revenue of $197,706
- Average daily rate: $379
- 59 ratings were received during the quarter, with an average rating of 4.83
- Largest booking: $25,326 for The Cardinal in February
- Highest occupancy: 100% for The Hammock in March
Q1 Vacation Rental Occupancy and Owner’s Revenue
The table below displays the total Owner’s Revenue realized in Q1, with occupancy data for our bookable vacation rentals in Q1. These properties have shown a strong return on investment overall. However, it’s important to note that vacation rentals can take up to 90 days to stabilize before they reach their full potential. During this time, there will be fluctuations in occupancy rates and revenue as they gain exposure on booking sites and build a reputation among travelers.
*Owner’s Revenue is calculated by subtracting the booking-related costs, such as host fees, cleaning fees, taxes, etc., from the Gross Revenue. Occupancy % is calculated based on the number of days the property was available to book in Q1.
Closing Thoughts By Arrived VP of Investments, Cameron Wu
As we wrap up Q1, we are truly humbled by the incredible momentum Arrived has experienced. With $20 million in equity funded in the quarter, including $14 million in March alone, we are well-positioned for a great Q2. We made significant progress in our legal strategy and efforts to work with the SEC. We’ve created two new vehicles through which we can make shares available to investors and reduce our average time to make shares available for purchase. Additionally, we are in the process of completing our annual audits of property performances for 2022, which will be available in the first days of May.
Our long-term rental portfolio remains robust, with a 93% stabilized occupancy rate as of March 31, 2023. We expect continued improvements as we dive into the hot leasing season. We are also thrilled to announce the addition of 4 new vacation rental markets and 6 long-term rental markets, which we can’t wait to bring to you soon. As we navigate economic uncertainty, geopolitical tension, and a wild interest rate market, rest assured that our team and conviction in our mission remain unshakable. We are truly grateful for the opportunity to invest alongside you.