In-Depth Real Estate Investment Reviews

The Definitive Arrived Homes Review:

Read This Before You Invest

Arrived Homes aims to make buying shares of single-family homes and vacation rentals easy, but does it live up to the hype? We dove deep into their offering to find out.

Investment Quality Score:
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Arrived Homes

By the Numbers
Minimum Investment
Investment Holding Period
5 years
Early Withdrawal Penalties
Yes - Undisclosed
Rent Payout Frequency
Average Yearly Returns

The Bottom Line

Should You Invest With Arrived Homes?

Arrived Homes is an easy option for unsophisticated investors to access quality fractional real estate, but their lack of transparency around recouping investments is deeply concerning.

Pros & Cons

Arrived Homes Pros and Cons

Arrived Homes Pros:

Easy to Use ✨

Makes it easy to invest in real estate with a well designed platform and low entry costs

Great property options 🏠

Gives investors access to Class A properties.

Strong track record 📜

Has an experienced team and has funded over 150 properties

Low Minimum Investment 🔑

Investors can invest as much as they like as long as it's over $100

Arrived Homes Cons:

Long Lockup Period 🔐

Expected investment period is 5 to 7 years

Investment Tip: Have an exit plan before you make an investment

Hidden penalty details and exit options 💸

Selling early requires an application and, if approved, incurs unspecified “penalties”

Investment Tip: Beware of investments with undisclosed fees and exit options

Low rent returns 📉

Typical rent yield of 3-5% per year is low compared with returns from other real estate investment options (typically 5-15% rent yield per year) and the stock market (average 10% per year).

Investment Tip: Compare the return of an investment with alternative options

Slow rent payout 🐌

Only pays rent to investors a few times a year – much less often than other real estate investment options

Investment Tip: Factor in how quickly returns are delivered to your compounding calculations

Why We Wrote This Guide

Figuring out where to invest your money is hard enough. Stocks, bonds, and even crypto all have their places in the modern portfolio, but the most misunderstood asset class has always been real estate.

Over the last few years, several companies have appeared claiming to make it easier for people to invest in real estate by removing down payments, increasing liquidity, and breaking properties up into fractions. In such an environment, knowing who to trust and what you're really agreeing to when you invest is more difficult than ever.

We analyzed

Arrived Homes

by digging into key areas investors need to know about before going all in: How easy it is to invest, how much you can earn, and how you can get your money back once you've made the gains you wanted.

Full disclosure - we're Lofty, and we're one of those fractional real estate investment companies. We believe that a rising tide lifts all ships, and that providing an unbiased look at other fractional real estate companies through the lens of our industry expertise will help serve both investors and the companies serving them.

The Basics

What is Arrived Homes and How Does it Work?

Arrived Homes has positioned itself as the choice for retail investors looking to gain exposure in the real estate market without having to deal with the messiness that comes from actually buying buildings.

As such, they've built their product similarly to a REIT (real estate investment trust), except they focus on fractional shares of individual buildings rather than pooling investment with others across a broader real estate portfolio.

Who Can Invest?

Arrived Homes is currently open to all U.S. citizens or residents aged 18 or over. They don't require investors to be accredited, and all investors receive US 1099 documents yearly for tax purposes.

Investors can also invest through taxable accounts, as well as through third-party self-directed IRA providers.

How Do They Find Properties?

Arrived Homes sources and buys properties themselves before they fractionalize and list them on their marketplace.

First, they choose particular markets based around factors like potential for population growth, job opportunities, and single-family home trends. Then, they choose mostly single-family homes in newer developments, and follow a 6-step process for selecting particular homes to buy and list.

How Much Experience Do They Have?

Fractionalized real estate investing is a fairly new phenomenon. Within this context, Arrived Homes is one of the more experienced companies in the space. As of September 2022, they've fractionalized and sold 150 properties across all of their live markets.

Safety & Security

Arrived Homes has structured themselves so that each property is housed in its own standalone LLC which has its own bank account and a separate ownership structure. Arrived retains no material ownership stake in this LLC, creating a clear separation between the company and the investment properties.

This means that if Arrived Homes ever went out of business, they would simply assign a new custodian that would make all major decisions (like what property manager to use, when to liquidate the property, etc.). They don't offer any further information as to who that would be, and if investor's interests would be a determining factor in actions taken with the properties.

Arrived Homes uses Plaid, a robust 3rd party payments system, to integrate bank accounts with their platform.

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Ease of Use

How Easy is it to Invest With Arrived Homes?

Before investing, it's crucial to ask yourself what you're really investing in. It's not always as clear-cut as you might think.

What Can You Invest In?

Arrived Homes allows users to invest in fractions (or "shares") of rental homes. Their investments provide two kinds of returns to users — Appreciation and Property Cash Flow.

Arrived Homes purchases homes themselves, and then "fractionalizes" ownership of that property into purchasable shares that investors can then buy.

Properties & Locations

Most of the properties available to invest in on Arrived Homes are single family rental homes, but they're also expanding into short term vacation rental properties as of September 2022.

The majority of their stock appears to be high quality Class A properties — built in the last fifteen years, and located in desirable areas.

Most properties are located in the southern and mid-western United States, with a strong footprint in Georgia, Alabama, Tennessee, Arkansas, and the Carolinas.

Arrived Homes features class A properties in desirable neighborhoods

Minimum Investments

Arrived Homes' minimum investments are amongst the lowest in the fractional real estate investment space. Investors can buy shares of properties starting at $100 USD, which is light-years better than saving for a down payment in the traditional real estate market.

They also say that their average investment clocks in at $3,195, much higher than this minimum. Due to the liquidity constraints we'll get into later, Arrived Homes' high average investment is likely due to the fact that investors investors are primed to invest for the long term.

Documentation & Due Diligence

Each property has easy-to-use calculators to help quantify potential returns under certain sets of conditions, but in-depth property data and analysis is lacking. Arrived Homes doesn't provide investors with the documentation most will need to conduct due diligence for themselves. This may place an additional burden on investors to conduct research off-platform before making investments.

How to Invest

Arrived Homes' product is delightful. It's easy to use, simple, and intuitive. It allows users to select investments from a variety of properties in multiple markets.

Investing is also straight forward. Simply create an account, upload your identifying information, and invest in the property of your choosing directly from your bank account or from your self-directed IRA account.

"Arrived Homes will take at least $55,000 in fees on a $685,000 homes over their 5-7 year holding period - money that could have been going to investors."

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Earning Potential

Arrived Homes Returns - How Much Can You Make?

There's really one core reason for investing in real estate: to leverage your current capital to create more capital. When it comes to choosing investing platforms, their expected yield and fee structure are the two core levers that determine how well they do that for their customers

Yearly Rent Yields

Using the standard Operating Expense estimate of 40% of yearly rent, the average cap rate (or rent return) of Arrived Homes' trending properties in September 2022 was 4.06%. Investopedia defines a "good" cap rate to be at least 5%, and goes on to say that a "4% cap rate indicates lower risk but a longer timeline to recoup an investment."

Even with these low cap rates, Arrived Homes doesn't pay rent returns directly back to their investors. Instead, they pay out according to a different metric they refer to as a "Rental Dividend Yield", which is essentially a fraction of the property's total rental yield. As of September 2022, this dividend averaged between 2.4% and 3.6% – significantly smaller than their average gross rental yield.

We'll explain this difference in more depth below in the Fees section.

How Often is Rent Paid Out?

As mentioned, Arrived Homes doesn't pay out rent in the traditional way. They instead pay out a "Rental Dividend Yield" to investors quarterly, which represents a specified percentage of the property's collected rent.

Due to the magic of compound interest, investments perform better in the long term the more often rent yield is paid out and reinvested by investors. Quarterly dividends like the kind Arrived Homes pays out mean that Arrived Homes investors miss out on a bigger portion of an investor's compounding interest than they could if they paid out more often.

As Einstein said, "Compound interest is the eighth wonder of the world. He who understands it, earns it. He who doesn't, pays it."

Arrived Homes pay out a quarterly "Rental Dividend Yield" instead of rent payments. This allows them to separate property cashflow from what they pay investors

Expected Property Appreciation

Appreciation is the difference in property value between what a property was bought for and sold for by a particular owner. Arrived Homes targets low cap rate properties, meaning they're more interested in chasing appreciation value rather than cash flow. Nobody can predict long-term market changes, so Arrived Homes focuses on projecting the expected Property Appreciation over the next year.

However, Arrived Homes also redefines property appreciation as "Property Equity Returns", similarly to how they split real rent payments and Rent Dividend Yield. They do this to capture a portion of a property's appreciation themselves, and decouple the property's growing value with what they have to pay out to investors.

Of the properties trending in September 2022, the average expected real property appreciation in year one was 6.38%, while the expected Property Equity Returns – Property Appreciation minus fees – was only 3.66%. Nearly half the real appreciation is being captured by Arrived Homes rather than their investors.

Arrived Homes also claims that users can track the value of their Property Shares like one can with stocks on the market. They use an unnamed third-party to update Property Share values, but they don't do it often enough to make it valuable. The first share re-evaluation occurs six months after the initial property sale, and only quarterly after that.

Arrived Homes also takes a cut of their property appreciation

Fees & How They Make Money

Arrived homes makes money in three ways - Agent Rebates, Sourcing Fees, and Assets Under Management Fees.

Arrived Homes acts as the buying agent for themselves when they buy properties, so they capture Agent Rebates from the original seller of the property when they buy it. Investors don't see this fee as a line item on their Property pages.

Investors do see their Sourcing Fee, however. It's labelled alongside all other expenses, and seems to be around 5% of the home's closing value. For example, Arrived Homes charges investors nearly $35,000 on this $685,000 home.

There are also Arrived Homes' AUM Fees. After selling out a new property's shares, they also start billing a hefty ongoing fee equivalent to about 0.5% of the property's value per year. That means investors are being charged an extra 2.5% to 3.5% out of the property's appreciation over the standard 5-7 year holding period. With these fees, Arrived Homes is netting an additional $17k to $25k on each property they sell, even before calculating in property appreciation.

All these fees are on top of any additional revenue they may make through their separation of real cash flow from their "Rental Divided Yield", and separating real property appreciation from their "Property Equity Returns".

Arrived Homes also charges 8% of rental income to pay for their third-party property managers.

Arrived Homes' fees, minus their initial Agent Rebate fee. Note the Quarterly Asset Management Fee.

Expected Return on Investment

While we lack a crystal ball to tell us how real estate markets will act in the long term, we can make some assumptions to help understand the true return of an investment in an Arrived Homes property.

If we generously assume that Arrived Homes expected Rental Dividend Yield and Property Equity Returns hold constant for the first five years of a five year investment term, and we use averages found in currently trending properties (3.5% Rental Dividend Yield, 3.66% Property Equity Returns), we can assume that an investment of $10,000 would compound in the following way:

→ End of Year 1: $10,735.46

→ End of Year 2: $11,525.00

→ End of Year 3: $12,372.61

→ End of Year 4: $13,282.56

→ End of Year 5: $14,259.43

At a 7.16% annual yield, a $10k investment with Arrived Homes offers $4,259 in returns over 5 years. That looks good on the surface, but if we dig a little deeper, it means that investments barely break even if inflation remains high for a few years. Inflation is currently 8.5%, which is more than Arrived Homes' projected returns. Any investment returning less than that rate loses money in the long term.

What If You Had Invested Elsewhere Instead?

Here's what would have happened if an investor had invested that $10,000 in other common investment vehicles instead.

Arrived Homes vs. Bonds

You would have earned $3,824.59 in yield - about $400 less than your Arrived Homes investment if you'd invested that same $10,000 into corporate bonds (which are similarly illiquid) and drawn Moody's long-term average (6.53%).

Arrived Homes vs. REITs

You would have earned $9,142.84 in yield - over 2x more than your Arrived Homes investment if you'd invested that same $10,000 into a fund mirroring all 12 equity REIT subsectors (real estate investment trusts) over the last 10 years (13.2%).

Arrived Homes vs Stocks

You would have earned $10,581.68 in yield - nearly 3x more than your Arrived Homes investment if you'd invested that same $10,000 into the stock market and drawn the S&P 500's average yield over the last decade (14.7%).

"Any [early liquidation] fees will be disclosed and charged concurrently with the completion of the transaction."

Arrived Homes' liquidity policy

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Investment Liquidity

What Happens When You Want to Sell Your Arrived Homes Property Shares?

One of the most important things to keep in mind when deciding which real estate investment platform to use is to ensure you understand how easy it is to sell your stake when you want to.

In short, liquidity is a way to measure how much control you have over your money after you've invested it. Traditional real estate is illiquid because selling buildings is difficult and time consuming. On the other hand, cash is as liquid as it gets since you can exchange it for goods at any time.

Holding Period

Arrived Homes' liquidity policy leaves much to be desired. Once investments are made, investors are unable to access or sell those investments for at least five years. Not only that, but selling investments is not the investor's decision – Arrived Homes decides when to sell. It might be within the 5-7 year window as they expect, but it might be earlier or later, too.

Be wary of long holding periods like that of Arrived Homes.

Early Withdrawal Penalty

If you don't want to wait a full 5-7 years for your investment to mature, there may be an option for you. Arrived Homes conducts a quarterly sellback program where investors can apply to sell their shares back six months after the initial sale has passed.

This program has a few major problems. First off, Arrived Homes will not guarantee that they'll accept your sellback even during the prescribed period, meaning you might be stuck with your investment until they decide to liquidate the property themselves.

Not only that, but they also reserve the right to "disclose and charge [fees] concurrently with the completion of the [sellback] transaction." This implies that investors will be charged an unknown, undisclosed amount upon the sale of their investment without Arrived Homes being required to inform them and gather consent about these unknown fees before they initiate the sell back.

It's easy to imagine a situation in which an investor's request to sell prior to the five year mark is either denied outright, or accepted but with indiscriminate fees charged on that transaction without them disclosing them before hand.

Arrived Homes is essentially in full control of their investors money once it's been invested

How Much Control They Have Over Your Money

In essence, they have all the control when someone invests in one of their properties.

→ They decide if you can sell sooner than 5 years later

→ They decide what kinds of fees they'll charge if they let you sell early

→ They decide when to sell the property you're invested in

Once invested, Arrived Homes investors are basically just along for the ride.

"If you own a share of a property but you can't access your money without permission, do you really own that property?"

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The Final Verdict

Is Arrived Homes a Good Investment?

Arrived Homes is a decent option for unsophisticated investors looking to get involved in real estate with minimal understanding required. Investors must be willing to forgo control, liquidity, long-term returns, and security to access Arrived Homes' easy-to-use product that grants fast access to real estate as an asset class.

Arrived Homes' fractional investing system and software product is user friendly and easy to use, and their low minimums are attractive. On the other hand, their nice user experience hides some concerning lack of transparency and accountability when it comes to recouping investments over the long term.

We rate this opportunity a 2.5 out of 5. Proceed with caution.

Lofty is the most flexible way to invest in real estate.

While you're here, here's why you should try Lofty. Lofty makes it easy to invest in real estate more flexibly than ever. Enjoy $50 minimums, daily rent payouts, and easily sell your holdings with low fees & no lock-up periods. Get started today.

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What Else Should You Know About Arrived Homes?

Arrived Homes & Reddit

Arrived Homes has a Subreddit where users can learn more about what they do and meet other investors.

Arrived Homes & Jeff Bezos

Arrived Homes raised money from Jeff Bezos' "Bezos Expeditions", the Amazon founder's venture capital firm.

Arrived Homes Support & Contact Information

You can reach Arrived Homes by emailing [email protected] or calling 1(814)-Arrived (277-4833)