The three bedroom, two bathroom, This split-level home in Fayetteville, Arkansas looks like the perfect family home. It has a charming brick exterior, a lush, green lawn, and a fenced yard perfect for hosting meals. 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, known today as Soapstone, is owned, in a roundabout way, by 102 investors who collectively purchased just over $100,000 worth of stock through a company called Arrived Homes. The property is managed and rented for $1,600 per month, a bit below the city’s average rent of $1,795. Investors, who can buy for as little as $100, receive a share of the profits.
And it’s not just soapstone. Arriving, alongside a handful of other so-called fractional investment startups, adds even more noise to an already crowded real estate market. Investors can buy hundreds of similar properties on the company’s website, where each listing features an Airbnb-style profile that details the neighborhood, costs, number of bedrooms and bathrooms and return on investment.
In addition to Arrivé, there’s Lofty AI, which uses a token model for people to purchase and allows them to collect rent later in the day. Another company, reAlpha, sells shares in homes that serve as Airbnbs, including a treehouse resort in the works. Landa lets people invest in stocks worth as little as $5 in homes around Atlanta or $20 in Brooklyn apartment buildings. Daniella Lang, a product marketing specialist at the company, says investors “see this as an American dream opportunity” that allows them to build wealth in real estate. Anyone can click a button to invest, but that doesn’t really make them an owner.
Fractional investing startups say they are lowering the barriers to real estate investing and making it as easy as booking an Airbnb. At Arrived, 40% of investors are renters themselves, according to Ryan Frazier, the company’s CEO. The idea is that people excluded from the real estate market can benefit without taking on mortgage debt. But they also add small investors to the real estate frenzy at a time when the housing shortage continues to drive 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 could come “at the expense of housing stability” and risk worsening a system in which for-profit investors can “wreak havoc among low-income residents.”
