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.
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.
TORONTO – One expert predicts Ottawa‘s changes to mortgage rules will help spur demand among potential homebuyers but says policies aimed at driving new supply are needed to address the “core issues” facing the market.
The federal government’s changes, set to come into force mid-December, include a higher price cap for insured mortgages to allow more people to qualify for a mortgage with less than a 20 per cent down payment.
The government will also expand its 30-year mortgage amortization to include first-time homebuyers buying any type of home, as well as anybody buying a newly built home.
CIBC Capital Markets deputy chief economist Benjamin Tal calls it a “significant” move likely to accelerate the recovery of the housing market, a process already underway as interest rates have begun to fall.
However, he says in a note that policymakers should aim to “prevent that from becoming too much of a good thing” through policies geared toward the supply side.
Tal says the main issue is the lack of supply available to respond to Canada’s rapidly increasing population, particularly in major cities.
This report by The Canadian Press was first published Sept. 17,2024.
OTTAWA – The Canadian Real Estate Association says the number of homes sold in August fell compared with a year ago as the market remained largely stuck in a holding pattern despite borrowing costs beginning to come down.
The association says the number of homes sold in August fell 2.1 per cent compared with the same month last year.
On a seasonally adjusted month-over-month basis, national home sales edged up 1.3 per cent from July.
CREA senior economist Shaun Cathcart says that with forecasts of lower interest rates throughout the rest of this year and into 2025, “it makes sense that prospective buyers might continue to hold off for improved affordability, especially since prices are still well behaved in most of the country.”
The national average sale price for August amounted to $649,100, a 0.1 per cent increase compared with a year earlier.
The number of newly listed properties was up 1.1 per cent month-over-month.
This report by The Canadian Press was first published Sept. 16, 2024.
MONTREAL – Two Quebec real estate brokers are facing fines and years-long suspensions for submitting bogus offers on homes to drive up prices during the COVID-19 pandemic.
Christine Girouard has been suspended for 14 years and her business partner, Jonathan Dauphinais-Fortin, has been suspended for nine years after Quebec’s authority of real estate brokerage found they used fake bids to get buyers to raise their offers.
Girouard is a well-known broker who previously starred on a Quebec reality show that follows top real estate agents in the province.
She is facing a fine of $50,000, while Dauphinais-Fortin has been fined $10,000.
The two brokers were suspended in May 2023 after La Presse published an article about their practices.
One buyer ended up paying $40,000 more than his initial offer in 2022 after Girouard and Dauphinais-Fortin concocted a second bid on the house he wanted to buy.
This report by The Canadian Press was first published Sept. 11, 2024.
