Crowdsourcing Platform Arrived Homes Takes Aim at SFR Market

Arrived Homes, the real estate crowdfunding investment platform, announced it has raised $10 million in equity and $27 million in debt financing for a total of $37 million.

This is Arrived’s first financing round, let by Core Innovation Capital and including Bezos Expeditions (personal investment company of Jeff Bezos), Good Friends (from the co-founders of Warby Parker, Harry’s, and Allbirds), Time Ventures (Marc Benioff’s investment fund), Spencer Rascoff (general partner of 75 & Sunny Ventures and former CEO of Zillow), Dara Khosrowshahi (Uber’s CEO), and others.

The money is for purchasing new properties, which are rented out to consumers, and expanding the company’s headcount.

Arrived Homes purchases single family homes, typically putting 60% to 65% in non-recourse long-term mortgages, and lets consumers provide the rest of the equity. 

“Our customers come to our website, they browse homes that are available, they can view information on a property, see rental rates if it’s already rented, see information on the market,” CEO Ryan Frazier tells GlobeSt. “Then they can invest and buy shares starting at $100.”

The company structures each property as a REIT that requires at least 100 investors. A house can top out with 200 investors. There is a regulatory limit on concentration of capital; five or fewer investors cannot own more than 50% of a property.

We sold through our first six properties for $1.5 million in home value in less than two weeks,” Frazier says. Now the company has about 30 houses spread across North Carolina, South Carolina, and Arkansas. “We have a plan to grow market selection rather quickly,” Frazier says. 

“We make money in two ways,” says Frazier. “We take a sourcing fee [listed] on each property page. Then we get [about] a 1% per year fee on the equity management.” The company typically holds a reserve fund for each property to address unexpected repairs, a period of lost rent, or operating expenses.

Single family rentals have garnered interest from multiple corners in commercial real estate, especially institutional investors.

Where Arrived differs is in a greater ability to diversify investments. Unlike the approach of many larger investors, there is no inherent need to cluster properties into a single area. The company works with networks of brokers, insurance firms, title companies, and more to identify potential properties.

The parent firm, Arrived Holdings Inc., was created in 2019. Arrived Homes is a “series LLC” that officially started in July 2020. 

“We spent a year building the regulatory process and building up the platform,” Frazier says. “Our offering was qualified [by the SEC] in March of this year. We are new, but given the experience of the team, we expect to build this offering quickly at this point.”