Jeff Bezos has received his fair share of criticism over the years – for everything from Amazon.com Inc.of (NASDAQ: AMZN) business practices for his major investments in the space and more recently his investments in a real estate startup that is buying single-family homes in several states above across the country.
Start up Go there is an investment platform that allows retail investors to purchase shares of single-family homes that are used as long-term rentals or as short-term vacation rentals. The company was the first platform qualified by the Securities and Exchange Commission (SEC) to offer shares of rental properties to non-accredited investors.
Bezos made an early investment in the company through his Bezos Expeditions Fund in a seed round in 2021, joining other prominent investors like Salesforce.com Inc. (NYSE: CRM) Founder Marc Benioff via Time Ventures, former Zillow Group Inc. (NASDAQ: Z) CEO Spencer Rascoff and Uber Technologies Inc. (NYSE: UBER) CEO Dara Khosrowshahi. Bezos made a second investment in the company earlier this year in a Series A round of Arrived.
Arrived has grown rapidly since its launch last year and has now acquired over 200 properties. Retail investors on the platform have fully funded 182 properties totaling over $66 million. Rental real estate investment services cost $10/share with a minimum investment of $100.
People can often seek to criticize Bezos for practically any of his moves, but the timing of his investment in Arrived may have contributed to the backlash. Several markets throughout the country have seen record home price increases between 2020 and 2022, leaving many Americans unable to own a home.
While a number of factors contributed to the rapid growth in house prices, many have blamed institutional investors. Based on Pew Charity Foundationinvestors account for 24% of US home sales in 2021, and data from National Association of Realtors says that institutional buyers make up 13% of the residential sales market in 2021.
During a hearing held by the House Financial Services Oversight and Investigation Subcommittee in June, Chairman Al Green said, “Private equity firms have purchased hundreds of thousands of single-family homes and put them on the rental market. This removes from the housing market homes that may have been purchased by individual homeowners. “
The hearing did not point out To or Bezos, but several people expressed their outrage on Twitter.
Minnesota real estate agent and “Big Brother” star Janelle Pierzina tweeted, “Six more families cannot buy at this market. This market will be active for a very long time. “
Several other tweets suggested similar comments, like This user said“Perfect… .just what an overheated market needs…. The richest Ppl in the world uses retail investors to continue to outpace ordinary buyers.”
Another recent one tweet said, “It looks like this~ Really bad. Admittedly I don’t quite get it, but I’m sure it’s been extremely exploitative during the housing crisis, and I’m both angry and appalled.”
But can a real estate investment platform really hurt the housing market?
With the total number of homes sold in the US between 2021 and 2022 at around 12 million, Arrived’s approximately 200 purchases represent about 0.0000167% of transactions, which is unlikely to be large enough to impact the market. House.
While critics see Arrived as something that restricts ownership of real estate, the company’s founders believe they are doing the exact opposite. In an episode of Benzinga’s Real Estate Podcast, the CEO arrived Ryan Frazier said, “Why does it have to be so binary that, you save for years on these down payments, usually six figures today, and then you commit to that city or That property forever or really permanent?
“And that was the idea for Came. How do we consider the barriers that prevent people today from starting to own real estate? Capital, time commitment and expertise required, and how do we lower the barrier to entry? So, if you have the time and expertise but may not have the capital to diversify into as many properties as you would like, Arrived can make it easy for you.
“You don’t have the time to invest in new markets and build a presence there, and you want to be able to diversify. Has come can also step into that scenario. So it’s really taking those three main platforms that people don’t have to invest capital, time, and expertise and makes it very easy to get started.”
To date, there are eight properties for long-term rental and three for vacation rentals available for investment on its platform.
Image source: Arrived and Shutterstock
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