Welcome to Arrived’s Q4 2022 review! This article will review the occupancy, dividends, and appreciation of the 192 Arrived properties operating during Q4 2022.
Arrived hit a milestone with over $1.2 million in dividends paid out to investors in 2022. In Q4, investors earned $530k+ in rental income, a $157k+ increase from the previous quarter. An impressive 192 properties paid out dividends with annualized yields ranging from 2.0% to 7.9% on long-term rentals and 3.6% to 5.2% on short-term rentals. After several strong quarters of share price appreciation, we finally saw share prices decline by an average of -4% for specific properties in Q4.
Occupancy
Arrived ended 2022 with an occupancy rate of 87% for the 192 properties in operation during the quarter – this was helped by residents moving into 27 properties in Q4. It’s also worth noting that the average term on these 27 leases was 20 months, and 59% 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.
Dividends
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 Q4 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.
Appreciation
Share Prices are a way to see the value of your investment change over time, much like you would track a portfolio of stocks.
This quarter, we updated the Share Prices for 121 properties. We re-value the property and the value of the shares that investors buy quarterly after the property has been owned for six months.
After 3 quarters of appreciation in 2022, we saw the broader market changes affect the price of homes in Arrived’s portfolio, which led to an average -4% decrease in quarter-over-quarter appreciation in Q4. While share prices react to the current market in the short term, we maintain that real estate performs best as a long-term investment, all while investors continue earning dividends through rental income.
Even as the housing market has experienced a decline, real estate values are typically less volatile than the stock market, and prices haven’t changed nearly as dramatically as stocks or crypto. Over the last 9 months, the full Arrived portfolio saw a net +21.6% growth, compared to relative losses of -14.2% for the stock market and -21.0% for public REITs*. However, it’s important to note that past performance is not indicative of future results, and there is the potential for future declines in real estate prices.
*Arrived index/portfolio: +21.6% is the time-weighted return of all Arrived properties during 2022. Properties enter the index when they receive their first Share Price update.Only 9 months of 2022 data is available for Arrived.
Stocks: S&P 500 total return index
REITs: NAREIT index
As you can see in the chart above, the most significant factor in driving the gross returns for each property is how long it’s been since the initial IPO and how long that property has had a chance to appreciate. See our historical returns page for more information.
A Great Year for Wealth-Building
In 2022, Arrived generated over $2.6 million in cumulative wealth for Arrived investors, comprising just over $1.2 million in dividends and over $1.4 million in property appreciation.
Closing Thoughts By Arrived CEO, Ryan Frazier
As we close the books on 2022 and reflect on the past 12 months, there has been no shortage of changing dynamics in the economy. Throughout the year, we saw the Federal Reserve conduct one of its fastest-ever periods of interest rate hikes in an effort to combat record-high inflation. As we begin 2023, it seems increasingly possible that inflation broadly peaked during the middle of last year, with most of the core drivers signaling a downward trajectory.
The tumultuousness of 2022 has made the importance of maintaining a diversified portfolio across asset classes and diversification within each asset class even more evident. Strategies such as dollar cost averaging also help to reduce exposure to market timing risk and spread your investment out over time. The previous year has only helped to reinforce our belief that private real estate investment should be a pillar of any investor’s portfolio and remains one of the best ways to build wealth long-term.
The investments team at Arrived maintains high vetting standards year-round, and less than 0.2% of homes we review make it onto our platform. In reaction to changes in the housing market in 2022, we adjusted our offers to further-reduced price points to acquire at prices we believe will be well-positioned to maximize investor returns over the long term. This process also meant that we had limited inventory available on Arrived at times throughout the year.
We have also worked hard to make new asset classes available for investors. In September, we launched vacation rental assets, allowing anyone to access the economics of owning a vacation rental property without the work typically involved. We’ve funded over $11 million in vacation rental equity across 13 vacation markets. We paid out our first vacation rental dividends in Q4 and are excited to continue to expand this segment in the years ahead.
As we continue to grow, we have so much in store for investors in 2023 and beyond and are excited to spend this next year investing alongside you.
