WASL launches a trading platform for rental home shares

A version of this article first appeared in the CNBC Property Play newsletter with Diana Olek. Property Play covers new and evolving opportunities for the real estate investor, from individuals to venture capitalists, private equity funds, family offices, institutional investors and large public companies. subscription To receive future issues, directly to your inbox.

Fractional ownership isn’t an entirely new concept in real estate, but one company is taking it to a new level, with the help of new funding from big-name investors. It creates what is called a real estate stock market.

Arrived, which launched in 2021, is a platform for real estate investors to buy and sell rental home equity for under $100. Instead of investing in a public REIT, they can build their own portfolio of properties, managed by Arrived. Not only do properties generate rental income, but they can appreciate over time. Because properties can be owned by hundreds of investors, they are taxed as REITs.

“We spent about a year working with the SEC to create this framework within the regulation so that both accredited and non-accredited investors can participate,” explained Ryan Frazier, co-founder and CEO of Arrived. “So we have a recurring offering structure through the SEC to register each property, and then each property to qualify as a REIT.”

Fraser describes this as “breaking up” the REIT into individual properties, so investors can choose what they want. Some properties have more than a thousand investors. To date, Arrived has nearly 500 properties in 65 cities. The number of its holdings has been doubled every year.

Investment platform Roofstock, which mostly sells entire investment properties on its site, also has fractional ownership opportunities but with a much higher minimum investment.

Arrived is now announcing a new $27 million fundraising to help launch a secondary market platform, where investors can trade their shares in individual homes across the US in minutes. This allows them to quickly exit or expand positions as well as gain appreciation and rebalance portfolios.

“Investors can now buy and sell stocks from each other on Arrived,” Fraser said, noting that in the first three weeks the option was available, investors placed 57,000 buy and sell orders in the market.

“I think it’s exciting, because we’re really bringing this liquidity to the real estate market, which I think makes real estate investing easier once we move online,” he added.

The new funding was led by Neo, a venture capital fund and mentoring community.

“The Arrived team is cracking up, and I love the boldness of their vision: the stock market for real estate,” Neo CEO Ali Partovi said in a statement. “I’m betting on them to democratize and digitize access to America’s $50 trillion residential real estate.”

Participation also included Forerunner Ventures, Bezos Expeditions, and Core. Other existing investors include Salesforce CEO Marc Benioff, Match Group CEO Spencer Rascoff, and Uber CEO Dara Khosrowshahi, bringing total funding to $61.7 million to date.

Since its inception, more than 850,000 investors have collectively invested more than $330 million in homes that have arrived, according to the company.

This new platform comes at a time when traditional home purchases have stalled and investors have found it increasingly expensive to purchase single-family rentals on their own. Home prices remain historically high, and interest rates are much higher than they were just three years ago during the last housing boom.

Investors make up the highest share of homebuyers ever this year, according to Cotality, but only because the number of buyers occupying homes has shrunk dramatically.

In order to protect itself from weakness in the overall housing market, Fraser said Arrived has become very selective about its markets and has stopped using long-term leverage in the portfolio. The majority of properties on the Arrived platform are owned by 100% equity investors, he said, adding that for those with mortgages, the average interest rate is less than 4%.