In past generations, ordinary families often bought a small property and rented it out to generate additional income and retirement security. It might be a handyman special or discounted foreclosure in a nearby neighborhood and with 20% down and a lot of elbow grease and paint, Mom and Pop could turn the neighborhood ugly duckling into a beautiful swan.
The 2008 real estate crash shifted the market as institutional investors, incentivized by government discounts, bought many foreclosed homes, finding long-term profit potential. As home values rose and inflation drove up interest rates, affordability became challenging for Gen Z and millennials. Many in these generations viewed homeownership as restrictive, especially with the flexibility of remote work enabling moves for better job prospects or more affordable rentals, thus increasing rental demand over traditional ownership.
Crowdfunding websites taught these generations that one could accomplish financial goals as part of a larger community where individuals pooled small amounts of money together to fund expensive projects. Enter fractional real estate ownership with startup real estate platforms such as Arrived Homes, which had the backing of Amazon.com founder and CEO, Jeff Bezos.
With Arrived Homes, for a minimum of $100, anyone can invest in a large portfolio of single-family rental homes that pay a monthly dividend and appreciation from potential changes in property values when the investment holding period ends. Arrived Homes takes care of all property management aspects so investors are not involved in more traditional land lording aspects.
The Arrived Single Family Residential Fund is a public REIT with the same tax treatment as other traditional REITs. The fund distributes at least 90% of its taxable income to investors annually.
This investment model is extremely appealing to the younger generations and Arrived Homes has already received more than $206 million from over 685,000 investors. Arrived seeks out properties with the highest potential for appreciation and rental growth in 61 markets across the U.S. Most of its 413+ property-funded portfolio thus far has been located in the southeast and southwest areas. So investors can invest in diversified geographic areas, rather than being bound to local areas near them as in traditional real estate investing.
