Real estate has always been a significant investment option but shelling out the required funds may be cost prohibitive for all but the most affluent among us. Jeff Bezos and his partners may have solved this problem.
Check out the real estate investment platform Arrived Homes. Go to the site and listen to the quick explanation entitled “What is Arrive in 1 min”. Very simply, an investor can buy “shares” of rental properties and collect the rental income attributable to those shares. If the economy holds out and real estate continues to appreciate, the properties (and the shares) will increase in value over time. The company intends to hold the properties for five to seven years before selling them and distributing the equity to the investors.
The business finds, buys and manages residential rental properties and offers shares of the properties to investors. Potential investors can browse and choose among available properties. Management includes locating tenants, maintenance, repairs, improvements as well as handling accounting and taxes. A quick review reflects several properties in South Carolina.
An interesting Arrived approach is to encourage the tenants of the rental properties to become investors in the properties they occupy. The idea is to encourage the tenants to treat the properties as if they own them….because they do! The longer the lease the tenant signs, the larger the equity incentive.
Rental income is paid quarterly in the form of dividends. Investors can review their returns and potential appreciation in the user dashboard.
How does the company make its money? It charges two fees, a sourcing fee and an assets under management fee. The sourcing fee is paid up front and the assets under management fee is charged at 1% per year. Both fees as listed on each property’s “page”. Costs are deducted from the rental income.
The site launched a little over a year ago and has experienced significant growth. One report indicates properties have been purchased valued at close to $40 million already. New properties are listed every couple of weeks, and many sell out quickly.
The intent it to make investing in real estate as easy as investing in stocks with a minimum investment of only $100. It’s an interesting concept!