The three-bedroom, two-bath, split-level house in Fayetteville, Arkansas, looks like a perfect family home. It’s got a charming brick exterior, a lush, green front lawn, and a fenced-in backyard perfect for hosting cookouts. It’s on a quiet street with two schools and a Boys and Girls Club nearby. But this perfect family home has an unusual owner—or owners.
The property, which these days is known as the Soapstone, is “owned,” in a roundabout way, by 102 investors who have collectively purchased just over $100,000 in shares through a company called Arrived Homes. The property is managed and rented out for $1,600 a month, a bit below the city’s average rent of $1,795. Investors, who can buy in for as little as $100, get a cut of the profits.
And it’s not just the Soapstone. Arrived, alongside a handful of other so-called fractional investment startups, are adding yet more noise to an already-crowded real estate market. Investors can buy into hundreds of similar properties on the company’s website, where each listing has an Airbnb-style profile that breaks down the neighborhood, costs, number of bedrooms and bathrooms—and return on investment.
In addition to Arrived, there’s Lofty AI, which uses a token model for people to buy in and lets them collect rent later that same day. Another company, reAlpha, sells shares in homes that serve as Airbnbs—including a treehouse resort in the works. Landa lets people invest in shares valued as low as $5 in houses around Atlanta or $20 in Brooklyn apartment buildings. Daniella Lang, a product marketer at the firm, says investors “see this as an American dream opportunity” that lets them build wealth in real estate. Anyone can click a button to invest—but that doesn’t really make them homeowners.
Fractional investment startups claim that they lower the barrier to investing in property—and make it as easy as booking an Airbnb. At Arrived, 40 percent of investors are renters themselves, according to Ryan Frazier, the company’s CEO. The idea is that people locked out from the housing market can profit without taking on mortgage debt. But they also add small investors to the real estate feeding frenzy at a time when housing shortages continue to push up prices, leaving many Americans stuck in expensive rental properties.
“Maybe some people will benefit from it, maybe they will make money,” says Amee Chew, a senior research analyst at the Center for Popular Democracy, a progressive advocacy group. But, Chew adds, more real estate investments may come “at the cost of housing stability” and risk worsening a system where for-profit investors can “wreak havoc on low-income residents.”
link