Tough economic conditions have forced younger people to adapt. According to the National Association of Realtors, the median age of new homebuyers in the US has risen to 36 years old. People marry later, are more likely to have student loans, and have more stagnant wages. All the while, real estate prices are rising. In Phoenix, Arizona, the median home price in 2004 was $174,815. In 2023, that will be $450,000. Average salaries from 2004 to 2021 increased by 70 percent, falling short of explosive home prices.
That’s part of what drew Emanette Peniche to the Soapstone. Peniche, who lives and rents her home in Los Angeles – 1,500 miles from the tiny brick house in Fayetteville – says she regrets not investing more when she first started, and now has a handful of properties in her Arrived- wallet. “I was immediately captivated by the accessibility of real estate investing,” said Peniche, a 33-year-old who works in product marketing at Meta. In fact, she was so drawn to the model that she gave marketing expertise to Arrived as an unpaid consultant in 2021.
The Soapstone is similar to other investment properties advertised by Arrived, such as the Sheezy in Chattanooga, Tennessee, or the Mimosa in Tuscaloosa, Alabama. The first homes advertised on the platform probably won’t sell for another two to three years, giving them time to appreciate, said Frazier, CEO of Arrived. Then investors can cash out.
The average investor spends about $3,500 on five or six properties, Frazier says. But investments can be as high as $25,000 and include accredited investors, said Bret Neuman, head of brand and content at Arrived. Still, most people invest less than $1,000. And according to Arrived, it will bring $1.2 million in dividends to investors by 2022. The property portfolio was valued at a total of $1.4 million in the same year, the company says.
Other part-owned startups take a different approach to the same idea. reAlpha, the vacation rental company, sells shares of investment properties to use as Airbnbs. The company says it uses AI to analyze properties and predict their viability as vacation rentals. It then buys, renovates and manages the properties. Y Combinator-backed Lofty AI lets people buy tokens for $50 in homes. People can then use their tokens to vote on management decisions about their properties, such as how to make repairs and whether to evict a tenant.
Landa is selling stock in at least a dozen mansions in Douglasville, Georgia, a city just west of Atlanta, and more homes in Atlanta and its other suburbs. It’s a region experiencing an influx of investors, thanks in part to controversial legislation that favors landlords, including a law banning rent control. But major investor activity in Atlanta dwarfs this space of listings — four major real estate investors in the area own an estimated 27,000 properties.
The affinity for Sunbelt and Mountain states that straddle the southern US should come as no surprise: Fractional investment start-ups are simply following the trends of other real estate investors. That has largely been the case since the Great Recession, which began in 2007, reshaped the real estate market in the US. Major investors, backed by venture capital and backed by new proptech, came in and bought not only apartment buildings, but also single-family homes in historically more affordable suburbs, such as those around Atlanta, Charlotte, North Carolina, and Phoenix.
