A startup backed by Jeff Bezos and Salesforce CEO Marc Benioff is the latest venture working to extend real estate investing to the masses.
Arrived Homes, a company that offers shares of rental properties starting at $100, raised $37 million in equity and debt from investors that include the Amazon founder’s private investment company Bezos Expeditions and Benioff’s Time Venture in a fundraising round led by Core Innovation Capital, Bloomberg reported.
Arrived Homes isn’t the first startup trying to expand real estate ownership. Fundrise, reestablished in 2016 as a REIT, does one better — allowing non-accredited investors to buy shares of single-family, multifamily or industrial buildings for as little as $50.
Fundrise recently secured a $300 million credit facility from Goldman Sachs to finance new construction on investable single-family homes and has outbid institutional investors trying to acquire new rentals. In December, it swiped a new rental development in Texas out from under larger firms with a $1 billion bid.
Fundrise has acquired or is under contract for about 2,000 homes and plans to buy more than 25,000 over the next few years, according to Bloomberg News, magnitudes greater than Arrived Homes’ haul.
Arrived Homes has acquired just 15 homes and holds contracts for 18 more. Funds raised will go toward growing that portfolio, which Arrived Homes hopes will hit 100 houses by year’s end.
Other startups such as Roofstock allow more wealthy investors to own rental shares. And NestEgg, another venture-capital-backed startup, is building a more direct investment base. CEO Eachan Fletcher hopes to create a million millionaires in the next five years by allowing individual owners to acquire more buildings through property management and financing software.
Arrived Homes’ approach is most similar to that of Fundrise: It allows U.S. residents to buy shares of properties regardless of wealth or income. The billionaire-backed firm contracts with property managers to allow investors to buy homes across markets, Bloomberg said.
The company’s average investment is $1,800 across two or three houses.
Rental homes got less attention from big investors until the pandemic boosted demand for non-urban living. Large firms like Brookfield Asset Management and Nuveen Real Estate have since committed billions to buying rentals, the publication reported.
[Bloomberg] — Suzannah Cavanaugh
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