Bezos-backed Arrived Homes expands into vacation rental market
US: Seattle-based real estate investment startup Arrived Homes, which allows investors to buy shares in single-family rental homes, has announced that it has added vacation rental properties to its platform.
Founded in 2019, Arrived Homes is backed by a number of high-profile names, including the venture capital arms of Amazon founder Jeff Bezos and Salesforce co-CEO Marc Benioff. In addition, the startup has received investments from the likes of Uber CEO Dara Khosrowshahi and former Zillow Group CEO Spencer Rascoff.
The company is already listing seven properties, whose assets total an estimated $5 million, in states such as California and Arizona that can be rented out as vacation rentals. One of the properties, Nashville-based ‘The Oasis’, sold out of all of its shares on the first day of trading on Wednesday and is now listed on the Arrived platform.
While close to 100,000 people are said to have signed up to Arrived Homes, around 10,000 users are actively investing, and 200 to 300 investors on average own shares in each home.
A company email sent to users read: “We’re thrilled to announce vacation rentals launching on Arrived. Vacation rentals are fully furnished homes that are leased for short-term stays [one to 30 days] on platforms like Airbnb and Vrbo.”
Arrived Homes co-founder and CEO, Ryan Frazier, said: “Platforms like Airbnb have helped vacation rental owners generate over $150 billion dollars in rental income from serving one billion guest arrivals, and yet, less than 0.5 per cent of these guests have been able to access the wealth-building potential of this rapidly growing asset class.
“We’re changing that today by adding these assets to our platform,” he added.
The startup’s business model works by crowdfunding to help investors buy shares of rental properties for a minimum of $100, as it seeks to democratise access to the wealth-building potential of real estate investment beyond wealthy individuals and institutional buyers. Investors on the Arrived platform are able to earn passive income while the company handles all real estate operations from property maintenance to acquisitions.
Looking ahead, Arrived Homes plans to expand into more US markets such as Florida, Texas, Nevada and Indiana, although it may face obstacles in its way as jurisdictions continue to try to enforce zoning laws affecting short-term rental operations.
By diversifying its real estate portfolio into the short-term rental asset class, Arrived Homes is the latest marketplace that is aiming to simplify the investing process and lower barriers to entry.
Triangle.Luxury launched its $700 million rental marketplace in July, while the likes of fractional ownership vacation rental marketplace Here and alternative cash flow financing provider Nectar have recently raised $5 million in seed round funding and $25 million in a senior secured credit facility respectively.
Despite criticism that real estate investing platforms are contributing to a shortage of housing supply and sharp increases in rental prices, Arrived Homes believes that there is a clear demand for “quality rental housing” for individuals and / or families that would otherwise not have the financial means to afford to purchase a home.
In May, Arrived Homes raised $25 million in a Series A funding round that enabled it to add new asset types and grow its team. The startup now offers an inventory of 150 single-family rental properties in 27 markets across the United States, worth more than $55 million in total asset value.
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