Arrived Homes, a Seattle-based startup that allows investors to buy shares of single-family homes, is adding short-term vacation rental properties to its investing platform.
“We’re thrilled to announce Vacation Rentals launching on Arrived,” the company said in an email to users Wednesday. “Vacation rentals are fully furnished homes that are leased for short-term stays (1-30 days) on platforms like Airbnb & VRBO.”
The company has already listed seven properties designated to be short-term vacation rentals. Investors can buy shares of these homes, which have names like “The Mirage,” which is located in Joshua Tree, Calif., and “The Ace” in Scottsdale, Ariz. These rental property assets total $5 million, the company said.
“Platforms like Airbnb have helped vacation rental owners generate over $150 billion dollars in rental income from serving 1 billion guest arrivals, and yet, less than 0.5% of these guests have been able to access the wealth-building potential of this rapidly growing asset class,” CEO and co-founder Ryan Frazier said in a statement. “We’re changing that today by adding these assets to our platform.”
Arrived has about 100,000 people signed up for its service, with about 10,000 users actively investing. On average, there are about 200-300 investors per house. The startup uses crowdfunding to help these investors purchase shares of rental properties for as little as $100, aiming to democratize real estate investing beyond wealthy individuals and institutional buyers. Investors on the platform can earn passive income while the company handles everything from property acquisition and management.
Investors on the platform have been eager to put their money toward short-term rentals. The Nashville-based vacation rental “The Oasis” sold out all of its shares on the first day of trading on Wednesday and was listed on the trending page on the Arrived website.
The startup aims to expand its offerings across both single-family rentals and vacation rental properties. It also plans to open in new markets such as Florida, Texas, Nevada and Indiana. However, it may face roadblocks as various jurisdictions are cracking down on short-term rentals by enforcing various zoning laws, such as the bill signed by Honolulu Mayor Rick Blangiardi that requires property owners to book their unit for a minimum of 90 days.
Real estate investing platforms, like Arrived, have faced criticism for gobbling up housing supply and driving up prices. The company previously defended its business model by saying that there is a demand for “quality rental housing” for individuals and families who may not have the financial means or incentive to purchase a home, adding that it does not bid on housing stock that would otherwise be owner-occupied.
The startup was founded in 2019 by a trio of tech vets including Frazier, CTO Kenny Cason and COO Alejandro Chouza. Its cap table features high-powered backers including the venture capital arms of Jeff Bezos and Marc Benioff, along with investments from former Zillow Group CEO Spencer Rascoff, and Uber CEO Dara Khosrowshahi, among others.
Arrived has a total inventory of 150 single-family rental properties in 27 markets across the country, totaling more than $55 million in total asset value.