A Jeff Bezos-backed real estate investing startup is launching a new fund to make it even easier for everyday Americans to speculate on the rental homes of other everyday Americans.
Arrived, which first launched in 2021, snatches up single-family homes and turns them into rental properties that anyone can invest in for as little as $100. Until now, Arrived customers could only purchase shares of individual homes and receive dividends from the rental profits, effectively creating a distributed network of landlords.
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Now, the company plans to allow customers to easily invest in a broad portfolio of its rental housing, further financializing the housing market for a growing consortium of fractional mini-landlords. The company’s newly launched “Single Family Residential Fund” lets investors put their money in a fund that invests in single-family homes across the company’s holdings, similar to a Real Estate Investment Trust. The fund also has a minimum $100 investment.
In a webinar touting the new fund last week, the company explained it is betting on single-family home rentals because fewer people can afford to buy homes and more people are stuck renting.
In the same webinar, Arrived’s vice president of investments, Cameron Wu, said the company searches out properties that are “affordable enough today that you can get a good cash flow.” The company, which began by buying properties in Fayetteville, Arkansas, where the company’s co-founders were once based, said they’re now buying properties in Greeley, Colorado, which has, “higher price points when compared to the country, but [is] more affordable when it comes to Colorado.”
Later in the webinar, CEO Ryan Frazier said the company is capitalizing on the lack of housing across the country.
“The single-family home residential home market has just been so undersupplied for more than the last decade and the supply of properties in the market is lower now … as mortgage interest rates have gone up,” Frazier said. “At the same time, interest from individuals in renting properties is also going up.”
Arrived has quickly become a source of fascination for high-profile tech moguls. Former Amazon CEO Jeff Bezos, Salesforce CEO Mark Benioff, Zillow co-founder Spencer Rascoff, and Uber CEO Dara Khosrowshahi are among the investors.
Frazier, who previously founded a company that mined social media conversations for market data, told Talk Business and Politics in 2019 that he founded Arrived to give people an option outside of renting and homeownership.
Of course, Arrived is reducing the supply of single-family homes available for purchase, even as it adds to the rental supply, exacerbating the problem it is profiting from. This has been a criticism lodged for years at private equity-funded single family home purchases, which have increased dramatically since the pandemic. Investors accounted for a quarter of all homes sold in 2021 according to Stateline and 28 percent of all homes sold in 2022, according to Pew Charitable Trusts.
As of 2022, the total share of investor-owned single-family homes was only about 5 percent, but investors could account for 40 percent of the single-family home market by 2030, according to Yardi, a company that also invests in single-family homes (and was named in a class action price fixing lawsuit this year).
The company currently lists over 300 homes across the country for investment, including in Arkansas, Tennessee, and Virginia. So far, about half a million people have invested in their homes, according to Arrived.
While Arrived’s portfolio is a drop in the bucket compared to big players like Invitation Homes, which claims to own 80,000 single family homes across the country, or Tricon Residential, which says it owns about 35,000 homes, its growth is a sign that venture capital money is also staking its claim on the nation’s homes.
As mortgages get more inaccessible to everyday buyers, companies with large amounts of investment capital are increasingly taking over landlord duties, even as they let consumers in on the action for $100.
