Real Estate Lesson by Arrived Homes

Arrived Homes has provided an educational mini-series to inform the Rocket Dollar audience about the significance of Real Estate investing, why you should consider adding Real Estate to your profile, and how to achieve real estate investing through Arrived Homes. To learn how to use your Rocket Dollar account to invest through Arrived Homes, please visit our partner's detail page.

Lesson 1: Why Real Estate, The Most Trusted Investment Strategy

Americans view real estate as the best long-term investment, as shown year after year by the Gallup polls, and Arrived couldn’t agree more. Here are their top 3 reasons why real estate is a great investment strategy.

Bigger growth

When you invest in real estate, your money works for you. Not only is it a less volatile investment than buying stocks over the past 20 years, but it has also delivered more substantial returns than investing in a diversified basket of stocks.

More stability

Everyone needs a home, which is why rental property investments are so smart – people will always need homes. In addition, the real estate market is often pretty stable and constant, so you can trust that your investment won’t experience drastic changes over long periods of time.

Diversify Your Assets

As they say, It's never good to put all your eggs in one basket. By investing in real estate, you reduce risk by adding an asset that is not correlated with other common investments like the stock market. With Arrived, you can easily diversify across different homes, tenants, and markets.

When it comes to real estate investing, it's best to think long-term. Rental properties largely build wealth for investors through appreciation, which means a property will continue to earn over time. Real estate also acts as a hedge against inflation, so your capital and purchasing power aren't reduced over time, even during times like these.

Lesson 2: Why IRA investors should consider real estate

For too long, investors have been limited to only investing in stocks and bonds within their retirement accounts. With Rocket Dollar, investors can now invest their retirement funds across a wide spectrum of alternative asset classes.

As far as alternative investments go, real estate is one of the most tried and true. Here are some specific reasons that IRA investors need to own a rental home in their portfolio:

Low Volatility

Compared to the stock market, real estate is much less volatile. Real estate is known for its consistency, particularly since investors earn from both the rental income and the appreciation of the property. 

Long-Term Time Horizon

IRA investors are, of course, looking to maximize the value of their investments in the long- term. This aligns perfectly with real estate, which tends to perform best over longer periods of time.

UBIT/UBTI

Typically IRA investors need to be wary of making investments that utilize debt. Thankfully, Arrived properties are each structured as a REIT, allowing you access to leveraged investments while being exempt from UBIT considerations.

Lesson 3: How Arrived Delivered on Client Investments

Rental properties make money in two ways- through passive income and appreciation (more on this below). Arrived has come up with a way to value your rental property investment, and track the income and appreciation that Arrived client investments are earning to date. Check out the statistics here.

Arrived property Share Prices are announced 6 months after each property funding to accommodate for upfront closing fees. They will be updated quarterly after that point. You can learn more about Property Share Prices in Arrived's article.

Rental Home Returns

Real estate is often seen as one of the best long-term investments in America. You’ve seen how Arrived rental properties performed. Now we can take a wider look at the rental market and how it compares to other popular asset classes. Investing in rental properties has actually delivered stronger returns than even the S&P 500.

• The annualized return for rental property investing was 11.7% over the last 20 years, while the annual return for the S&P 500 was only 9.43% over the same 20-year period. Pretty impressive if you ask us.
• Check out the full Historic Returns Study with more figures and the calculation methodology.

So, how do rental properties make money?

1. Property Value Growth: As property values appreciate over time, investors grow their equity value in that property. These returns are magnified by purchasing a property with the help of low-cost debt (aka a mortgage loan).

1. Rental Income: Tenants pay their rent and the cash flow after expenses goes to the investors. Arrived pays out the income earned by YOUR property straight to your IRA’s bank account every 3 months. To learn more visit Arrived's FAQs.

It's Arrived’s goal to make real estate investing accessible to all, and there are several benefits to investing in single-family homes. Diversifying your financial portfolio, thinking long-term with your investment funds, and carefully analyzing returns on investments are just a few of the ways you can build wealth for your future.

Lesson 4: How Arrived Maximizes Your Investment

Arrived’s world-class investments team is focused on optimizing investor returns. As you make your investment decisions and think more about diversification, information on exactly what makes a good investment becomes pertinent. Arrived put together a quick Q&A (2 min read!) guide to answer common questions about how to maximize investments.

How does Arrived identify lucrative markets?

Arrived's data-driven market analysis model looks at criteria like strong job growth, economic development, population growth, and affordability. This allows them to select markets with strong current cash flow yield & optimistic long-term property values.

How does Arrived look for top neighborhoods within those selected markets?

Neighborhoods are chosen based on having good schools, low crime, fast commutes to the city’s economic center, and strong appreciation projections.

What are Arrived's ideal home-purchasing criteria?

Arrived builds a specific "buy box" that narrows the home details to give investors maximum returns - this includes a market price range, a bed/bath configuration, minimum square footage, year built (as they look for newer homes built within the last 20 years), and the level of renovation required.

How does Arrived source deals to find the right rental properties?

The real estate market is not perfectly liquid, leaving plenty of room for opportunity. Arrived's team works with experienced sales agents, property wholesalers, and directly with sellers to source new properties. This allows them to get a great deal for investors.

How is the right offer made on a home?

Arrived builds a detailed property investment plan that includes, among other things, an offer proposal, a pre-inspection report, a detailed renovation proposal from our contractors, and 7-year financial projections including financing details. Arrived is very selective on how much they're willing to pay, and only 5% of the offers we make are accepted!

It's Arrived's goal to help you feel more equipped when making investment decisions. Should you have any more questions, reach out to a team member through their website or read the detailed article about Arrived's Strategy for Maximizing Returns.