As traditional investment strategies evolve, many investors are looking for new ways to diversify. Fractional real estate investing can make it easier to access rental property opportunities without buying or managing an entire property.
In a recent Arrived webinar, we discussed how fractional real estate investing works, why investors use it to access residential real estate, and how Arrived helps simplify the process. Here are the key takeaways.
The case for real estate investing
Real estate has been a staple in investment portfolios for several reasons:
- Multiple income streams: Real estate can provide income through property value growth and rental income. As Arrived CEO Ryan Frazier explained, “You can earn money in multiple ways... from property value growth and rental income.”
- Favorable tax treatment: Real estate investments can benefit from tax advantages, such as depreciation, which can help offset rental income. “Real estate can have favorable tax treatment as well in the opportunity to defer tax on things like rental income using something called depreciation,” noted Frazier.
- Portfolio diversification: Real estate often correlates less with stock market performance, making it a valuable addition for investors looking to diversify their portfolios.
- Leverage opportunities: Real estate investments can benefit from low-cost leverage, which can magnify potential returns.
What does Arrived offer?
Arrived addresses the traditional barriers to real estate investing, which often require substantial capital, an extensive time commitment, and specialized knowledge. The platform allows investors to buy residential property shares, sidestepping traditional property ownership's complexities and costs.
Here’s a closer look at Arrived's key offerings:
Individual property offerings
Arrived's individual property offerings allow investors to invest in specific properties of their choice. This model provides:
- Customizable investment choices: Investors can select properties based on their preferences, such as location, property type, and potential returns. This enables investors to build a portfolio that aligns with their financial goals and risk tolerance.
- Fractional ownership: By purchasing shares in individual properties, investors gain ownership in the Series LLC that owns the property without buying the entire asset. This lowers the barrier to entry, enabling more people to invest in real estate.
- Transparency and control: Each property includes detailed information about the investment opportunity, such as forecasted rent, property condition, and market analysis. Investors can research and choose properties that meet their investment criteria.
Hassle-free real estate ownershipInvest in real estate, earn passive income, and diversify your portfolio with ease through Arrived.
Single Family Residential Fund
The Single Family Residential Fund offers a more hands-off approach to real estate investing. Key features include:
- Diversified portfolio: The Single Family Residential Fund pools investments in various single-family homes, providing built-in diversification. This can help reduce risk by spreading investments across multiple properties and locations.
- Professional management: Arrived’s experienced investment team manages the fund, handling property acquisition, maintenance, and resident management. This allows investors to access potential real estate returns without the day-to-day responsibilities of property management.
- Dividend income: Investors in the Single Family Residential Fund receive dividends from rental income, and the fund may also benefit from property appreciation, with minimal involvement required.
The Arrived Single Family Residential Fund Invest in a nationwided pool of single family residential properties in just a few clicks.
Real Estate Income Fund
The Real Estate Income Fund offers a different avenue for real estate investment, focusing on short-term loans rather than direct property ownership. Its main features:
- Short-term loans: This fund invests in loans that finance home renovations and other real estate projects. These loans typically have terms ranging from 6 to 36 months, providing shorter hold periods for the portfolio.
- Income potential: Investors can earn interest income from these loans, which can offer compelling yields. This option can be appealing for fixed-income investments that may offer higher returns than traditional savings accounts or bonds.
- Reduced exposure to property value fluctuations: Since the fund focuses on lending rather than owning property, investors are less exposed to real estate market volatility. This can be beneficial during periods of market uncertainty.
The Arrived Real Estate Income Fund Invest in a diversified portfolio of short-term loans secured by residential real estate, providing a historical 8.1%+ annualized yield.
Why Arrived stands out
Arrived’s innovative approach can offer several advantages:
- Accessibility: With low minimum investment amounts and fractional ownership, Arrived lowers the barriers to entry for individual investors who may not have substantial capital or extensive real estate expertise.
- Diversification: Arrived enables investors to diversify their portfolios across different types of real estate assets and geographic locations, potentially mitigating risk and enhancing potential returns through its various investment options.
- Ease of use: The platform’s user-friendly interface and streamlined process make it easy for investors to browse opportunities, invest, and monitor their investments. This modern approach contrasts with the traditionally cumbersome process of real estate investing.
Benefits of Investing with Arrived
Arrived offers several unique benefits for investors:
- Dividend income: Investors earn rental income without the day-to-day work of property management. “At Arrived, we make it a very passive experience where you invest in the properties that you want to,” says Cameron Wu, Vice President of Investments.
- Capital Appreciation: Real estate values can increase over time, offering long-term capital gains. Note, however, that the Real Estate Income Fund does not provide capital appreciation but focuses on interest income.
- No personal liability for property debt: Property-level financing is held at the Series LLC level, so investors are not personally liable for mortgage obligations.
- No operational responsibility: Arrived handles property acquisition, management, and maintenance, making real estate investment hassle-free.
- Tax advantages: Investors can benefit from depreciation and long-term capital gains tax treatment, potentially enhancing the overall returns on investment.
- Low minimum investment: Investors can access individual properties or diversified funds with a $100 minimum investment, a significant reduction from traditional investment barriers.
- Diversification and flexibility: Arrived allows for easy diversification across multiple properties and geographic locations, spreading risk and increasing potential returns.
Getting started with Arrived
Investing with Arrived is designed to be simple and straightforward. Whether new to real estate investing or looking for a more accessible way to diversify your portfolio, Arrived’s user-friendly platform simplifies the process.
1. Create your account
- Quick setup: Begin by visiting Arrived’s website or mobile app. You’ll need to provide some basic information to set up your profile. "The account creation process takes about 4 minutes," noted Ryan Frazier, Arrived's CEO.
- Verification: After entering your details, you may need to verify your identity and link your bank account. This is designed to protect your transactions and support compliance with financial regulations.
2. Explore investment opportunities
- Browse properties and funds: Once your account is set up, you can explore available investment opportunities. Arrived offers a range of options, including individual property shares, the Single Family Residential Fund, and the Real Estate Income Fund. Each investment opportunity includes detailed information, such as property features, offering details, and market analysis.
- Investment criteria: Use the platform’s filtering tools to find investments that align with your preferences and risk tolerance. You can evaluate properties based on location, rental yield, historical performance, and other factors.
3. Make your investment
- Select shares: For individual properties, you’ll choose the number of shares you want to purchase.
- Invest in funds: If you prefer a more diversified approach, consider the Single Family Residential, Seattle City Fund, or Real Estate Income Fund. Simply select the fund you’re interested in and decide how much you want to invest.
- Complete transaction: After selecting your shares or fund investment, you’ll complete the transaction online. The platform securely processes your investment by connecting to your bank account, making it easy to transfer funds.
4. Start earning
- Dividends: Properties begin paying monthly dividends once they start generating income. Dividend payments represent the cash flow after expenses and reserves. Dividends are deposited into your Arrived cash balance and may vary over time based on the investment's performance. Depending on your investment type, income may also include interest from loans or proceeds from property sales.
- Property appreciation: If the value of your invested properties increases over time, you may also benefit from appreciation, which can enhance your overall returns.
- Monitor your investments: Arrived provides a dashboard where you can track investment performance, view income statements, and stay up to date on property values and fund performance. This transparency allows you to manage and assess your investments effectively.
5. A more hands-off way to invest
- Hands-off management: Arrived handles the day-to-day work of real estate investing, from acquiring and maintaining properties to managing residents and collecting rent. That means you can access rental property investing without taking on the operational responsibilities of being a landlord.
- Flexibility and control: Arrived offers flexibility in how you build your investment strategy, whether you invest in individual properties or funds. You can adjust your portfolio based on your financial goals.
Why choose Arrived?
Arrived simplifies real estate investing by offering fractional ownership, low minimum investments, and a user-friendly platform. This modern approach allows you to quickly diversify your investments and start earning from real estate without the complexities of traditional property ownership.
