Single-Family Rental Investment Platform Arrived Homes Enters New Markets As Demand For Fractional Real Estate Grows

Arrived Homes, the real estate investment platform that offers fractional ownership of single-family rental homes, has expanded into two new markets with its latest round of property acquisitions. 

Last month, retail investors fully funded approximately $11 million worth of rental properties through the real estate platform that’s backed by Amazon.com Inc. AMZN founder Jeff Bezos, compared to $5 million for the entire first quarter of 2022. The number of investors on the Arrived Homes platform has doubled in the last two months, making it difficult for the company to purchase enough homes to meet demand.

The rental homes funded on the Arrived Homes platform have been limited to certain markets, including cities in Alabama, Arizona, Arkansas, Colorado, Georgia, North Carolina, South Carolina and Tennessee.

The latest batch of properties also includes homes located in two new markets: Cincinnati, Ohio, and Indianapolis, Indiana. The Cincinnati rental property was purchased for $385,000 and is being marketed for rent at $2,195 per month. The Indianapolis property was purchased for $290,000 and is being marketed for rent at $1,795 per month. 

The demand for fractional real estate investments has been growing rapidly since inflation has continued growing at record-breaking rates, cryptocurrencies have taken major losses and the stock market has been erasing the strong gains realized last year. 

Fractional real estate allows retail investors to easily gain access to a historically resilient asset class. The value of property shares has a low correlation to the stock market, and real estate values tend to move much slower than publicly traded equities.

Real estate investments also provide passive income through all market cycles. Even if real estate values start falling, the assets continue to provide cash flow through the rental income while waiting for the market to turn around.

The downside to this type of asset, in many investors’ eyes, is the limited liquidity. Unlike publicly traded stocks, fractional real estate shares typically can’t be sold instantly. However, this aspect helps maintain price stability.

A handful of issuers have secondary trading platforms, and more are coming in the next few months. While this process does provide some options for liquidity, the market size is too small to guarantee that there will be a buyer immediately available to fill your sell order.

Ultimately, real estate has historically performed best as a long-term investment, and investors should go into fractional real estate ownership with the intention of holding their shares long term.

Browse fractional real estate investment offerings from platforms like Arrived Homes on Benzinga’s Offering Screener

Looking for ways to boost your returns? Check out Benzinga's coverage on Alternative Real Estate Investments:

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Photo courtesy of Arrived Homes