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 round of funding, led by Core Innovation Capital and including Bezos Expeditions (Jeff Bezos’ personal investment firm), Good Friends (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 (CEO of Uber) and others.
The money is used to buy new properties, which are rented out to consumers, and to increase the workforce of the company.
Arrived Homes buys single-family homes, typically providing 60% to 65% non-recourse long-term mortgages, and letting consumers provide the rest of the equity.
“Our clients come to our website, they browse available homes, they can view information about a property, see rental rates if it’s already rented, see market information,” CEO Ryan Frazier told GlobeSt. “Then they can invest and buy stocks starting at $ 100.”
The company structures each property as a REIT requiring at least 100 investors. A house can exceed 200 investors. There is a regulatory limit to the concentration of capital; five or fewer investors cannot own more than 50% of a property.
We sold our first six properties for $ 1.5 million in less than two weeks, ”said Frazier. Today, the company has approximately 30 homes across North Carolina, South Carolina, and Arkansas. “We have a plan to increase market selection fairly quickly,” Frazier said.
“We make money in two ways,” says Frazier. “We take supply costs [listed] on every property page. Then we get [about] a commission of 1% per year on the management of the shares. The business typically holds a reserve fund for each property to deal with unscheduled repairs, a period of lost rent, or operating expenses.
Single-family rentals have aroused interest multiple corners of commercial real estate, especially institutional investors.
Where Arrived differs is in a greater ability to diversify investments. Unlike the approach of many large investors, there is no inherent need to consolidate properties into one area. The company works with networks of brokers, insurance companies, securities companies, etc. to identify potential properties.
The parent company, Arrived Holdings Inc., was formed in 2019. Arrived Homes is an “LLC series” which officially started in July 2020.
“We spent a year putting the regulatory process and the platform in place,” says Frazier. “Our offer was qualified [by the SEC] in March of this year. We are new, but given the experience of the team, we plan to build this offering quickly at this point. “