How to Earn Passive Income in Real Estate With $100: Arrived Homes CEO
- Ryan Frazier is the CEO of Arrived Homes, which enables investors to buy shares in rental properties.
- His company recently raised a $ 37 million seed round from billionaires Jeff Bezos and Mark Benioff.
- He explains how investors can purchase rental properties around the country for as little as $ 100.
It’s not every day that a two-year-old startup raises millions in debt and equity for its seed round from a high-profile list of VCs that include the personal mutual funds of billionaires Jeff Bezos and Marc Benioff.
But Ryan Frazier’s idea of bringing home home to the masses was carried out by the right person at the right time. After Frazier worked with regulators for nearly a year, Frazier’s Arrived Homes was the first to post SEC qualified offers to buy shares in individual homes.
The 33-year-old entrepreneur said he always wanted to invest in rental property, but growing his first startup meant a lot of moving.
“I’ve never been in the same place long enough to invest in home,” Frazier said in an interview. “The more we’ve moved over the years, the question kept cropping up: ‘What does property look like to us if we don’t know where we’ll be in 10 or 20 years’ time.'”
He initially tried to invest in mutual real estate funds, but soon found that these correlate more strongly with the ups and downs of the stock market than the housing market. To solve his own real estate investment problem, Frazier co-founded Arrived Homes with Kenny Cason and Alejandro Chouza in 2019.
Inventory sold out in less than 24 hours
Against the backdrop of a scorching housing market, Arrived Homes hit the market with a bang.
“Once we qualified, our first houses sold out pretty quickly,” said Frazier. “They sold out in less than 24 hours.”
With 23,000 registered users, this trend has not stopped. Every time new homes are posted on the platform, they sell out in less than 24 hours, he noted.
He attributed the strong demand to several factors, including Americans’ desire to become both homeowners and home investors. According to a
According to a study by the Bank of New York in April, more than 90% of respondents prefer owning their primary residence to owning stocks, while more than 50% of respondents prefer buying rental property to investing in stocks.
What has stopped most Americans from investing in rental property, according to Frazier, is large down payments even just to invest in a home, a tremendous amount of time researching and closing the deal, and the expertise needed to make an investment make.
Another development that may have accelerated the growth of Arrived Homes is investors’ increasing understanding of the concept of fractional investing. From stocks and commercial real estate to works of art and sports memorabilia, investors have become familiar with the idea of buying stocks of assets they might otherwise not be able to afford.
Additionally, single family homes that Arrived Homes are focused on have become one of the most sought-after assets in the real estate market today. The pandemic-induced flexibility of working from home has enabled more people to move to places with a lower cost of living and a higher quality of life. This has generated high demand for quality rental apartments, but the lack of supply has contributed to sky-high prices. Some investors have warned that home prices are no longer sustainable and could fall earlier than expected.
Frazier adds that Arrived Homes tends to focus on buying newly developed homes that offer more predictable maintenance costs, thereby providing more consistent performance.
As little as $ 100
To keep the barrier to entry as low as possible, Arrived Homes has a minimum investment per home of just $ 100.
This has allowed investors on the platform to diversify across real estate. The company offers 28 properties in six states and 13 cities. The average investment is about $ 2,300, and investors own an average of nearly four homes, according to Frazier.
Most of the sold out properties are in Arkansas, South Carolina and North Carolina. Frazier said the company will consider customer interests and market data as its investment team makes acquisitions in other locations. It is to be expanded to 20 cities by the end of the year and to 50 cities next year.
As with any property investment, returns are a combination of dividend yields and future property growth. In the last quarter, the company paid dividend yields (on an annual basis) between 5.5% and 7%, he added.