In an era where traditional investment strategies are being re-evaluated, fractional real estate investing can be a compelling option for diversifying and enhancing portfolios.
During a recent webinar hosted by Arrived, key insights were shared about how fractional real estate investing can democratize access to rental property markets. Here’s a deep dive into the benefits and workings of investing with Arrived:
The Case for Real Estate Investing
Real estate has been a staple in investment portfolios for several reasons:
- Multiple Income Streams: Real estate provides 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 helps 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 to stock market performance, making it a valuable addition for risk-averse investors looking to diversify their portfolios.
Leverage Opportunities: Real estate investments 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 single family residential and vacation 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 can own a fraction of the property without buying the entire asset. This lowers the entry barrier, enabling more people to invest in real estate.
- Transparency and Control: Each property includes detailed information about the investment opportunity, including expected rental yields, property conditions, and market analysis. Investors can research and choose properties that meet their investment criteria.
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 SFR Fund pools investments in various single-family homes, providing built-in diversification. This reduces risk by spreading investments across multiple properties and locations.
- Professional Management: Arrived’s experienced investment team manages the fund, handling property acquisition, maintenance, and tenant management. This allows investors to benefit from real estate returns without the day-to-day responsibilities of property management.
- Passive Income Stream: Investors in the SFR Fund receive income from rental yields and property appreciation, with minimal involvement required on their part.
Private Credit Fund
The Private Credit 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 six to 36 months, providing relatively quick returns compared to traditional real estate investments.
- Attractive Yields: Investors earn interest income from these loans, which can offer compelling yields. This option can be appealing for fixed-income investments with potentially 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.
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:
- Passive Income: Investors earn rental income without the hassle 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 typically increase over time, offering long-term capital gains. Note, however, that the Private Credit Fund does not provide capital appreciation but focuses on interest income.
- No Liability for Debt: Investors benefit from real estate debt without personal liability, as Arrived manages all 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 minimum investment of $100, 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 as seamless and efficient as possible. 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. The account creation process takes about 4 minutes... you simply select the number of shares you want to buy,” Fraiser noted. Here’s a detailed guide on how to get started:
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.
- Verification: After entering your details, you may need to verify your identity and link your bank account. This ensures the security of your transactions and 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 Private Credit Fund. Each investment opportunity includes detailed information, such as property features, expected returns, 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 vital 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, you can invest in the Single Family Residential or Private Credit 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
- Rental Income: Once your investment is active, you’ll receive income from rental payments. For properties and funds focused on rental income, this typically means monthly payments deposited directly into your account.
- Property Appreciation: You can benefit from property value appreciation in addition to rental income. As the value of your invested properties increases over time, you stand to gain from the capital appreciation, which can enhance your overall returns.
- Monitor Your Investments: Arrived provides a dashboard where you can track the performance of your investments, view income statements, and stay updated on property values and fund performance. This transparency allows you to manage and assess your investments effectively.
5. Enjoy a Passive Investment Experience
- Hands-Off Management: One key advantage of investing with Arrived is the passive nature of the investments. The platform handles all aspects of property management, from acquiring and maintaining properties to managing tenants and collecting rent. This means you can enjoy the benefits of real estate investing without the day-to-day responsibilities.
- Flexibility and Control: Arrived offers flexibility and control over your investment strategy, whether you invest in individual properties or funds. You can adjust your portfolio based on your financial goals and market conditions.
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.
