Jeff Bezos Quietly Enters Residential Mortgage Business, Giving High Interest Rate Loans To Other Investors

Jeff Bezos may be best known as the founder of Amazon.com Inc. AMZN, but the billionaire has several lesser-known business interests across multiple industries. Through his investment firm, Bezos Expeditions, Bezos has made several early-stage investments in companies that have gone on to become industry leaders. Some of the more notable ones include Airbnb Inc. ABNB, Uber Technologies Inc. UBER and, more recently, Arrived. 

Arrived has made a name for itself by fractionalizing single-family rentals and selling shares to retail investors with a minimum investment of $100. Since launching its first property in 2021, the real estate investment platform has already funded nearly 400 properties and has over $156 million in assets under management. Bezos first invested in Arrived during the company's $37 million Seed Round in 2021, then doubled down on that investment during the Series A round in 2022.

New Real Estate Debt Fund

The company just expanded its offerings to include the Private Credit Fund, giving its investors access to a pool of short-term real estate loans made to other investors and homebuilders. Unlike a typical residential mortgage, these loans have terms ranging from six to 36 months and are used to finance real estate projects, such as renovations, rehabs or new home construction. The fund is targeting individual loans between $100,000 to $500,000 but will evaluate loan opportunities as high as $5 million. 

The fund generates cash returns by collecting interest payments on the loans and distributing them to investors. The Private Credit Fund is targeting an annualized yield of 7% to 9% with dividends paid monthly. The short-term nature of the loans also allows for more flexible liquidity options than many other debt funds. After six months, investors can request a redemption of all or a portion of their shares.

View fund details >>

During the announcement of the Private Credit Fund, Arrived co-founder and CEO Ryan Frazier said, "We launched this new product based on direct feedback from our investor community, and we’re confident that now is the right time to introduce it to investors. A number of debt investment opportunities have arisen that allow us to deliver strong risk-adjusted returns."

Growing Interest In Private Credit

The launch of Arrived’s new fund comes at a time when the private credit market is experiencing significant growth, particularly in the real estate sector. The current high interest rate environment along with uncertainties in the equity markets has made this asset class more appealing to investors seeking high yields and low correlation to the stock market. The number of opportunities has also increased as banks have tightened their lending requirements.

The current 30-year fixed-rate mortgage is 7.04%, and typical bridge loans range from 9.5% to 12%. Considering long-term government bonds are paying roughly 4.5%, residential real estate-backed loans offer a compelling risk-adjusted return. 

Interested investors can visit the website here to view more details about the new Private Credit Fund and invest as little as $100.