You Can Buy Shares Of Rental Properties With $100 Minimum Investment

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The following post was written and/or published as a collaboration between Benzinga’s in-house sponsored content team and a financial partner of Benzinga.

Real estate has been one of the greatest wealth builders throughout history and is still one of the greatest investments available today. That's if you don’t mind the headaches that go along with being a landlord and the large amount of capital needed to purchase a property. 

Advances in technology and loosened government regulations have made real estate investing more accessible to investors through crowdfunding. Yet most crowdfunding platforms still leave the barrier to entry high, with minimum investments of $25,000 or more.

One of the newest players in the real estate crowdfunding industry, Arrived Homes, is making real estate even more accessible to the average person by offering a platform that allows investors to purchase shares of rental properties for as little as $100.

The company handles the operational headaches involved with managing rental properties while investors collect their share of the cash flow. 

How The Investment Works: Arrived Homes finds and acquires residential rental properties that meet the company’s criteria, then offers shares of the properties to investors through its online platform. Investors can browse available offerings and choose the ones in which they want to invest.

They can also reserve shares of upcoming properties that aren’t yet available for investment. 

Investors collect quarterly dividends from the rental income while waiting for the property to appreciate in value over time. After the target hold period of five to seven years, Arrived Homes sells the property and distributes the equity to each investor according to the number of shares they own.

Assuming the property increases in value, the investors earn a return through the profits from the sale in addition to the dividends they’ve received. 

Visit the Arrived Homes Investment Platform

Returns On Rental Properties: Investors earn returns with rental properties in three ways:

  • Cash flow from rental income
  • Appreciation
  • Increase in equity as the mortgage is paid down

The returns earned through appreciation and increased equity are difficult to predict since it depends on the condition of the real estate market when the properties are eventually sold, but Federal Reserve data shows that home prices have appreciated at an average rate of 4.22% per year from the end of 1980 through 2020. 

As far as cash flow, the quarterly dividends Arrived Homes has paid to investors has resulted in an annual rate of return between 5.21% and 6.42%.

Should You Invest In Rentals? Real estate comes with several benefits, but rental properties aren’t for everyone. It’s important to note that real estate isn’t a liquid investment.

You won’t be able to simply cash out of your shares at any point if you need access to your money. Rental properties also come with vacancy risks. While property managers are typically able to fill vacant properties within 30 to 60 days, any periods of vacancy will cut into your cash flow for the quarter.

If you’re comfortable committing to an investment term of five to seven years and can handle potential dips in cash flow if a property loses a tenant, investing in rental properties is a great way to earn passive income and build equity. 

Photo: Dillon Kydd on Unsplash.

The preceding post was written and/or published as a collaboration between Benzinga’s in-house sponsored content team and a financial partner of Benzinga. Although the piece is not and should not be construed as editorial content, the sponsored content team works to ensure that any and all information contained within is true and accurate to the best of their knowledge and research. This content is for informational purposes only and not intended to be investing advice.

Posted In: Real EstateArrived Homes
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