Many renters nowadays are in the dark about the identity of their landlords. They rent their homes through agents, make online rent payments and, when issues emerge, connect with a property management representative rather than an individual owner.
The landscape of single-family rentals is shifting, with institutional investors claiming an ever-growing slice. Current data suggests institutional investors own about 5% of all single-family rentals in the U.S. MetLife Investment Management predicts this could surge to 40% by 2030.
Invitation Homes, Inc.
Post the 2008 financial meltdown, large-scale investors saw potential in the housing market, snapping up thousands of homes from banks at reduced prices. According to the National Association of Realtors, institutional purchases spiked again in 2021, constituting 13% of the residential sales for the year.
That same year, Amazon.com Inc founder Jeff Bezos ventured into the real estate market when he invested in Arrived, a startup aiming to purchase single-family rentals and then offer shares of these properties to individual investors for as little as $100. Arrived blazed the trail in fractional real estate, becoming the first investment platform to get the green light from the SEC to offer shares of individual rental homes to non-accredited investors.
Esteemed tech magnates like fellow billionaire Marc Benioff, Zillow's Spencer Rascoff, and Uber's Dara Khosrowshahi joined Bezos in funding the startup's $25 million seed round. Bezos later reinforced his commitment in Arrived's Series A funding.
To date, the Bezos-affiliated company has snapped up over 300 properties and funded over $170 million worth of real estate. Although these figures might seem modest next to powerhouses like Invitation Homes, the pace of growth is notable, especially since these acquisitions are funded by individual investors contributing sometimes just $100.
Fractional real estate investing has been a rising star in recent years. With soaring property prices, it's become challenging for many to invest individually. Fractional ownership grants investors access to substantial real estate tax advantages, passive income and value appreciation without traditional landlord responsibilities. And while procuring a rental home can be a lengthy endeavor, Arrived claims its users can become fractional owners within just 10 minutes. Currently, the platform has offerings for properties in North Carolina, Georgia, Tennessee, Virginia and Indiana.
