Intro — Arrived's History
Founded in 2019, based in Seattle, and backed by an all-star roster of venture capitalists — including Amazon founder Jeff Bezos and Salesforce CEO Marc Benioff — Arrived is arguably the newest real estate crowdfunding platform to join the big leagues. Arrived used to be called Arrived Homes (“Drop the ‘Homes’. It’s...cleaner”).
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Arrived is open to both accredited and non-accredited investors, and allows investors to purchase fractional shares in residential and vacation rental properties. Most Arrived investments, therefore, are equity investments, in which the investor has an ownership stake in the property.
What’s the deal with Arrived? Why have they become so popular recently? Should you invest with them?
Key Features
Arrived offers investment opportunities in residential and vacation rental properties. Some of them are even named after Game of Thrones characters — “The Sansa,” “The Arya” — and others just have incredibly weird names: “The Titus,” “The Tansel,” “The Sherwood,” “The Zane,” “The Roanoke,” “The Mallard,” “The Liberty.” The platform is designed to be an attractive option for investors with limited capital, and touts a low minimum investment of $100.
Here's how Arrived describes how their platform works: "Arrived acquires rental properties into an LLC and sells shares in that LLC to the general public. Arrived then manages the day to day operations including finding tenants and completing repairs. Investors receive cash dividends from rental income each quarter and capture any property value appreciation."
Arrived's properties are spread across various markets throughout the U.S., giving investors a handful of options for portfolio diversification. Crucially, though, location is the primary type of diversification available, and there’s no opportunity to invest in multifamily, industrial, or other CRE asset classes that truly lack correlation with the stock and bond markets.
The company’s narrow focus on the single-family asset class is limiting in another way: one tenant’s defection will leave the entire property vacant. You don’t get that with, say, apartment buildings. As a result, Arrived’s offerings are arguably more subject to volatility than commercial real estate investments. (The Single Family Residential Fund, however, has 100% stabilized occupancy.)
Investment Opportunities
Arrived Homes has two funds available for investment:
- Single Family Residential Fund, with 100% stabilized occupancy
- Private Credit Fund, with 8.1% annualized yield
Beyond that, Arrived really just offers individual property investments. This makes it easier to compare individual investments against each other, but by the same token, it feels pretty limiting.
Fee Structure
Arrived charges a 1% annual management fee, which is competitive within the industry. Additionally, there are sourcing fees ranging from 3.5% to 5% depending on the property type. While these fees are transparent, they can negatively impact overall returns, especially for smaller investments.
Minimum Investment
Arrived has a minimum investment of $100. The low minimum investment widens the base of investors, but at the end of the day, RealtyMogul and EquityMultiple (to name just two examples) have more lucrative and exclusive opportunities for accredited investors.
User Experience
The platform is user-friendly, and arguably has one of the best user interfaces in the industry — browsing and investing in properties is very simple and quick. The platform also provides ample information to aid in decision-making on the page of each offering.
Customer Support
Customer support is generally responsive, but there have been instances where users experienced delays in receiving assistance. The platform offers support via email and live chat, but phone support is limited.
Investor Testimonials
Common Praise
- Good customer support (“The website is awesome as is their due diligence, research investment theses, and customer support”)
- Easy to use (“Arrived is solving a very needed problem by allowing easy, universal access to rental property investing”)
Common Complaints
- Deceptive advertising (“Very deceptive advertising. They claim an asset is in a big city when you check the address its anything but. Instead of focusing on good location, they buy good looking properties in the middle of nowhere at the top price without even negotiating with the sellers just to bring flow to investors”)
- Popular investments are hard to get/technical issues (“I wish I could leave 0 stars. They were supposed to be offering new homes to invest in today. Their system kept crashing, preventing hundreds of people from investing")
Similar Real Estate Crowdfunding Platform Comparison
Arrived vs. Groundfloor
Arrived and Groundfloor are very similar in some respects. They both focus on single-family homes and are open to non-accredited investors.
One useful point of comparison is the Groundfloor's Flywheel Portfolio and Arrived's Private Credit Fund. They're both funds with $100 minimum investments, but they differ in several key ways.
Groundfloor offers higher target returns (9-14% vs Arrived's 7-9%), has a higher management fee (1% annually vs Arrived's 0.10% monthly), and provides a longer cancellation window (48 hours vs 24 hours). While both platforms offer monthly disbursements, Groundfloor includes both interest and principal payments, whereas Arrived only distributes interest income. Groundfloor's portfolio automatically invests in 200-400 short-term loans with automatic reinvesting capability, while Arrived's fund doesn't offer automatic reinvesting and requires a six-month lockup period before allowing quarterly redemption requests, which must be approved by the fund manager at their discretion. Both platforms allow accredited and non-accredited investors to participate in real estate private credit investments, but Groundfloor appears to offer more flexibility and automation in its investment structure.
Arrived vs. CrowdStreet, EquityMultiple, RealtyMogul
These three platforms (CrowdStreet, EquityMultiple, RealtyMogul) only offer commercial real estate investments to accredited investors, whereas Arrived focuses on residential real estate for both accredited and non-accredited investors. Arrived makes its offerings available under Regulation A of the Security Act, whereas CrowdStreet, EquityMultiple, and RealtyMogul makes use of Rule 506(b) and 506(b) of the Security Act’s Regulation D.
RealtyMogul, for example, provides access to commercial real estate and REITs, catering to investors looking for a broader range of asset classes than just single-family homes.
Arrived vs. Fundrise
Fundrise offers a lower minimum investment of $10 and a similar fee structure, but it focuses more on diversified eREITs rather than individual properties. It also allows users to invest in startups like Canva and Anthropic.
Track Record
I’m impressed by Arrived’s track record and transparency — as I stated in this article, they’ve had zero defaults to date, and the Arrived team had no problem answering my question, "How many defaults have you had?"
Scoring Arrived
Platform Details
- Years in Operation: 5
- Minimum Investment: $100
- Types of Investments Offered: Equity (Residential and Vacation Rental Properties) and Debt Fund
- Accreditation Requirement: No
User Experience
- Ease of Use: 3.5 Stars ... The platform is user-friendly, with a straightforward interface that makes browsing and investing in properties simple. The process of selecting and purchasing shares is intuitive, and the platform provides ample information to aid in decision-making. That said, the platform has had technical issues amid large amounts of traffic.
- Account Setup: 3.5 Stars ... Setting up an account is relatively easy, with a quick registration process. However, some users have noted that the verification process can take longer than expected.
- Customer Support: 3.5 Stars ... Customer support is generally responsive and transparent, but there have been instances where users experienced delays in receiving assistance. The platform offers support via email and live chat, but phone support is limited.
Investment Experience
- Investment Options: 4 Stars ... Arrived offers a good variety of residential and vacation rental properties. However, the high demand often leads to limited availability, which can be frustrating for investors looking to deploy larger amounts of capital.
- Returns: 3.5 Stars ... Arrived has delivered annual dividends ranging from 3.1% to 7.4%. While these returns are competitive, some investors have reported lower-than-expected returns due to high fees and market fluctuations.
- Risk Management: 4 Stars ... Arrived employs several risk management strategies, including the use of LLCs to limit liability and maintaining cash reserves to cover potential shortfalls. These measures help mitigate risks associated with real estate investing.
Platform Transparency
- Disclosure of Information: 3.5 Stars ... Arrived is transparent about its investment offerings, providing detailed information on each property, including financials, tenant status, and market trends, and they were the only real estate crowdfunding platform to answer my questions about defaults. This transparency aids investors in making informed decisions. Some users, however, believe that they oversell the offerings on their platform.
- Fee Structure: 3.5 Stars ... While the fees are clearly outlined, the sourcing fees can be relatively high, which may deter some investors. The platform is upfront about these costs, allowing investors to factor them into their investment decisions.
Overall Rating — 3.5 Stars
- Summary: Arrived is a solid choice for investors looking to enter the real estate market with minimal capital. Its user-friendly platform, transparency, and focus on residential properties make it an attractive option. However, the limited availability of properties, relatively high fees, and homogeneity of investments are notable drawbacks.
- Pros: Low minimum investment, passive income, transparent information, no accreditation requirement.
- Cons: Limited property availability, high sourcing fees, few debt investments, no phone support.
- Would Recommend? Yes, but only if you’re not an accredited investor
Conclusion
Arrived is well-suited for investors seeking passive income through real estate without the responsibilities of property management. Its low entry barrier makes it accessible to a wide range of investors. As the platform continues to grow and expand its offerings, it has the potential to become a leading player in the real estate crowdfunding space. However, investors should be mindful of the fees and potential liquidity constraints associated with long-term property investments.
(The Byers House from the Netflix show Stranger Things was offered on Arrived as a vacation rental investment.)