New Home Insights Podcast Episode 71 Transcript | John Burns Real Estate Consulting

Episode 71: Can Arrived Homes Turn Small Investments into Big Bucks?

 

Transcript

Dean Wehrli:

Welcome to New Home Insights, the John Burns Real Estate Consulting podcast about the U.S. housing market. I’m your host, Dean Wehrli. We’re back to housing today. If you’ve been listening, we did a couple in a row here, episodes that were not really all that housing. So I know you maybe thought we morphed into a social issues podcast or something like that, but no such luck. Today we’re going to talk about someone who’s attacking the single family housing investment world from a very different angle than the norm. We have Ryan Frazier from Arrived Homes. He has a company that is bringing small time investors into the really big time world of single family housing investment. Ryan, how are you doing this morning?

Ryan Frazier:

I’m doing well, Dean. Thanks for having me on. Excited to jump in.

Dean Wehrli:

Thanks for coming on. Let’s start with just a quick self intro. Tell us about your background before we talk more about Arrived Homes.

Ryan Frazier:

Great. Yeah. So my background, I’m the co-founder and CEO for Arrived. And before that, spent most of my career as an entrepreneur in software and technology. And really my kind of path to getting to this point was just moving around a lot, and realizing that in my own life wanted to own property but was never really in the same place long enough for that to make sense. So hence Arrived and really the ability for folks to invest.

Dean Wehrli:

Yeah. The name actually, when you know what you do, the name is very cool. It’s pretty spot on. Now, I like both analysis stuff and also story. I’m kind of numbers and words. So we’ll get into the guts here in a minute. But first, I wanted to start with your origin story. Arrived Homes allows anyone to invest in single family without big bucks, but you do have some big bucks behind you, like folks like Jeff Bezos. Tell us about how Arrived got started.

Ryan Frazier:

I think that for us it was really out of personal interests for my co-founders and I. And we had each just kind of moved around so much growing up, and also through our professional life that we were really trying to figure out when are we going to be in the same place long enough for it to make sense for us to one, buy a home to live in, but two, start investing in rental property? Because I think for us, we had seen either friends or family members just be so successful in investing in rental properties and using that as one of the ways to help generate wealth and passive income. And so I think it was that, I guess insight of what does the future of property ownership and property investing look like when this next generation is just moving around a lot more throughout their life? And how might we be able to serve that with an easier more passive way to access and invest in rental properties?

And so that’s really what kind of got us here. We saw that the vast majority of people we were talking to and telling this idea to of, hey, would you want to invest $100 into a rental property? It resonated so broadly. But for whatever reason, the high upfront capital to typically buy a home on your own or the time and expertise it requires just really left a lot of people out. And so that was really how we got to the idea, I mean personal experience in our own life of how do we make space for property ownership based on where our careers were going? And then the realization that it’s not just a problem the three of us had, it’s something broadly applicable to so many people.

Dean Wehrli:

So that elevator pitch for that literal 10 second elevator pitch to Jeff Bezos, because you bumped into him on an elevator somewhere in DC going to The Post, what was that pitch, that quickie?

Ryan Frazier:

Yeah. So Arrived is really a platform that makes it easy for anyone to buy shares in rental properties, whether they want to invest $100, $10,000 or more in individual homes. And then Arrive takes care of all of the work, finding the properties, managing those properties. So it really is a passive investment. And that really is what we’re focused on doing is just making it easy to access these rental properties.

Dean Wehrli:

Yeah. So I like that sector. I like the soundness of real estate. I don’t have a million dollars. Okay.

Ryan Frazier:

Exactly.

Dean Wehrli:

So let’s do that. Let’s get into the mechanics. As little as $100, what does that get you? Is that a share? And what does that a share in?

Ryan Frazier:

Yeah, so maybe we’ll talk about the product experience too, because I think Arrived is quite unique in that you aren’t really investing into let’s say a real estate fund. You actually are investing in individual properties. The way it’s structured is that there’s an LLC that owns the properties that you ultimately own shares of, and investors on Arrive own all of the shares of each of the properties. The investing experience, it kind of mirrors a little bit like browsing Zillow, but if there was a Amazon Buy Now button where you can buy shares in any of the properties that you see.

And that was really important to us, because I think what we found is that people are really excited about the investment returns potential for rental properties, but they also want to learn what it’s like to be a real estate investor. They want to be connected to the individual assets. Maybe they have their own ideas on which type of properties they want to invest in. And so it’s the passive investing experience. There’s no debt in your name. You are an equity holder. You don’t have to manage the property. But you also get to pick and choose what properties are in your portfolio.

Dean Wehrli:

That was actually my next question, that’s interesting. So you can literally say, I want this house, or my, whatever, 500 bucks, 1,000 bucks is on this house.

Ryan Frazier:

Yeah, that’s exactly right. We list all the properties on Arrived. Users browse those properties. They decide which homes they want to buy shares in. And then off we go. We manage the property on their behalf, the investors’ behalf. We pay out dividends to investors on a quarterly basis today, very soon to get to monthly because we want to get income back into the hands of people very quickly. And then over time, you benefit in any of the property value growth as well, because as the property value goes up, then the share price would intuitively go up as well and can access that equity appreciation also.

Dean Wehrli:

Can they also be even more passive? That is to say, can they say, I don’t know a whole lot about real estate, here’s 2000 bucks, you invest it for me?

Ryan Frazier:

I think that over time as folks get more familiarity with Arrived, and the properties that we bring to market and see the investment returns that they’ve been generating, naturally a lot of folks are saying, “Okay, how can I do this on more of a recurring basis?” And I think that’s what’s actually quite unique about how we’re seeing people use Arrived. Because the idea is, oh $100 in a property, okay, what does that really mean? And what we actually see people doing with those lower dollar amounts is not necessarily investing less money than they might have if they were going to go buy a rental property on their own. It’s just that they’re diversifying into multiple properties. They are diversifying over time, so they’re investing more on a recurring, on a monthly or weekly basis dollar cost averaging into real estate.

And I think that’s the cool thing that being able to buy shares of homes really unlocks is much more diversification for your first investment. That down payment money that you might have bought one house, you can now put that into 10, 20, 100 homes. And so that’s really the behavior that we see.

Dean Wehrli:

Well is there a cap? How much can someone invest?

Ryan Frazier:

There’s no caps on Arrived overall in terms of how someone can invest. In individual properties, we cap the amount of investment at just under 10% of the shares that are available for any one investor. And a big reason of that is to, one, make sure that everyone is able to co-invest together, but also because each of the properties, our long term rentals are taxed as REITs, or real estate investment trusts. And to have that tax favorable treatment of those REITs, you have to have 100 investors in an entity. So we have to create enough space for 1000 investors to buy shares in this one house, one llc.

Dean Wehrli:

You sell shares to, I believe, tell me if I’m wrong, but until that house is “fully funded,” so 100%. What is that sum to? Is that the home price that you purchased the home for?

Ryan Frazier:

Yeah. So there’s a couple of things there. The amount of equity that’s available or shares that are available is essentially in simple terms based on the price of the property divided by $10 per share. So all homes start at $10 per share. In terms of what goes into that though, the formula is a little bit different, because it both depends on the price of the home, any kind of improvements that we’re doing, and also if we’re adding a mortgage, because for a decent number of properties on Arrive, we’re adding long-term loads or a mortgage to provide the leveraging impact on potential returns. And I think that’s also a unique aspect of Arrived, a great benefit versus buying homes on your own is that you get that access to mortgage and levered returns of real estate, but without that debt being in your personal name, in your balance sheet and your responsibility.

So that’s how things are structured in general. What that might look like is, let’s say we have $100 house. For very simple terms, we might say $10 in property improvements, $5 as a cash reserve for initial maintenance or vacancy, our fees for sourcing and creating the property. And then, which is for long term rentals, 3.5% of the purchase price acting as the agent. And then reduce any debt. So $100 plus, let’s say $15, 115. But then if we put a 50% mortgage, subtract 50, so now we have $65. So 65 is what we would raise, that’d be the full equity of a house.

Dean Wehrli:

Okay. Is there a typical investment size? Have you noticed, is your investors have seen patterns in how much roughly they’re investing?

Ryan Frazier:

The investment sizes range quite a bit. I mean, we have folks that start at $100. We have folks that are investing into the six figures on Arrived. And I’d say our average today is probably around $3,500 to $4,000 as kind of that starting amount. And typically people on average invest in at least six properties to get some diversification, typically different cities. We’re in 26 cities so far today. And yeah, that’s kind of what we’re seeing.

Dean Wehrli:

So investors, are they all over the place? Are you national, international? I guess describe what are the characteristics of your typical investor?

Ryan Frazier:

Yeah. I’d say, so today we are open to U.S. based investors, or really anyone with a U.S. based tax id. And the process is very similar to opening a brokerage account or investing in the stock market. So you’re going through that process to create a brokerage account and do some KYC, and then you can invest. And part of that is because of the tax treatment. So it’s quite complicated to manage international investors investing in U.S. based real estate and the tax treatment of that. And the treaties are different for every country. So one day we will solve that problem. But for today, U.S. based investors.

Dean Wehrli:

At least Canada. I mean, come on.

Ryan Frazier:

Yeah. There are these tax treaties with nearby neighbors, if you will, Canada, for example. And I think that you’ll likely see us pick off those folks sooner than later.

Dean Wehrli:

Was the 100 bucks always because just for headaches? Did someone in the early days say, I’ve got, hold on 87 cents, what’d that get me in? Or was the 100 bucks, what was the reason for the 100 bucks?

Ryan Frazier:

I think we, the $100, actually my co-founder, Alejandro, he and I spent so much time figuring out what is that right price point? What makes sense? And there’s a lot of things that went into that. We just wanted it to be accessible though so that anyone could invest. What is a low enough price point so that really we expect that anyone could really participate, but also that it’s seen as an investment. And so that’s kind of how we got there. What we end up finding is that people who are really looking to invest and to build wealth through real estate are thinking about the long term. They’re thinking about, okay, how could I make this more like contributing to a retirement account or a savings account and start accumulating that more over time?

Dean Wehrli:

We can see what folks get out of it. They get, like you said, appreciation, they get rental income, they get operational ease, they get the lack of headaches. What do you get out of it? What’s your revenue stream?

Ryan Frazier:

So we make money in some of the transaction fees that I mentioned on the front end. So think of it as acting as the buyer’s agent, if you will. But we don’t have brokerage licensing today. But we get a percentage of the property price for structuring the deal, and then we earn on a recurring basis over time an asset management fee, which is about 0.6% of the property price. Works out to maybe on average about 1% of the dollars that are invested per year. And those two sources of income, the upfront transaction fees and the asset management fee really allow us to sustain and grow our business and build a healthy marketplace here. Yeah. So that’s how it works.

Dean Wehrli:

If you start disposing of assets, selling homes, that is, will you share in the profits of that?

Ryan Frazier:

Yes, we can. We can. We estimate that to exit a property between all of the fees involved,, agents on both sides, title escrow, that it might cost 6 to 7% to exit an investment, we prorate those fees into our share price so that investors have visibility into how that might impact the value of their shares from day one. And we might participate in that if, let’s say we act as the broker, or maybe we can provide some of those other services as well as an additional revenue stream. But today we have a pretty long term thesis in terms of holding the properties. Each one is at least five to seven years, and even longer for our vacation rentals. So we’ll get there in a couple of years.

Dean Wehrli:

Okay. Yeah. And that’s good. I’m glad to hear that. Because I think most people do. When they think of the soundness of real estate, you do think of that over the long term, at least I hope you do. You should, anyway. Let’s go on to your portfolio, and the houses, and the where and the what. But before we do that, I noticed, I saw, I think it was on your website, it said you guys are SEC approved for this. What does that mean in this context to be SEC approved?

Ryan Frazier:

Yeah. And I think I will say SEC qualified, since the SEC does not have an approval process, it’s more of a registration process and review. They’re very specific on their terminology.

Dean Wehrli:

I apologize, SEC. That was me, not Ryan.

Ryan Frazier:

I’m kind of joking a bit there. But yeah, I mean it’s an important aspect of the business. We spent, and this is quite odd for maybe a early stage company, but we spent over a year working on that process with the SEC to create a public offering document that lists the entire operations of the business, audited financial statements for our real estate portfolio, and ultimately going through this process, which is essentially similar to IPOing a company, except we created this process to IPO individual houses. And really the reason we did that is twofold. One is to allow non-accredited investors to invest. Not doing that meant that you’d have to have a million dollars of net worth or 2 or $300,000 in annual income. And for us, it was very important that that wasn’t a restriction on people investing so that way anyone could invest.

And the other is within that structure, there’s the opportunity to provide liquidity. So because it is this public offering registration process, we’re providing all of these audited financial statements and these reporting requirements, and the shares can be free trading. So that gives us the opportunity to create some access for liquidity for these rental property investments as well down the road. If some people don’t want to hold, let’s say for the entire investment period, they could access that as well. What does it mean? It’s really just a process of disclosure with the SEC. And we provide all of these reports, audits and disclose all of our operations so that it’s public record. And I think for investors, it’s really about investor protection. That’s what the SECC is there for. And we 100% support that and excited about that.

Dean Wehrli:

That’s what I was thinking. So it kind of adds a layer of transparency and protection for your investors to be SEC qualified, not approved?

Ryan Frazier:

Correct.

Dean Wehrli:

Okay. So let’s talk about your portfolio, I guess if that’s the right term. How many homes right now do you have under ownership, or at least are currently funding?

Ryan Frazier:

Yeah. It’s a fun day to be chatting, because I think we’re at 199. So we’re in the process of number 200. And the team right now is trying to decide what are we going to name it? Because each of our properties has a name tied to it.

Dean Wehrli:

I saw that. I saw on the website, they all have a specific name. You literally name. It’s not like 172 Riverside Drive, it has a name. Who does that? Is that is a big meeting, everybody throws out cool names from Star Trek?

Ryan Frazier:

It comes from a lot of sources. Team has fun naming them. Sometimes it’s the street name in simple terms. But we’ve also offered it up to investors to let them name homes. So different types of things that we’ve seen. We’ve named several properties off after pets for a Arrive team members

Dean Wehrli:

Snowball Two is one of the most popular homes, I believe right now.

Ryan Frazier:

That is the case. Yeah.

Dean Wehrli:

Yeah, I saw that. I thought that was very cool. So you have almost 200. Are you in growth mode? Do you see now as a good time to buy despite what’s happening in a lot of markets?

Ryan Frazier:

Yeah. I think that we’ve seen a lot of interest in investing in real estate and rental properties, particularly as there’s been more volatility in other asset classes, like public equities, crypto. And so we’ve seen a lot of interest. And a lot of our investor activity has really been over the last year, we’ve seen folks invest close to $50 million through the platform into these 200 properties that we’ve talked about. And we try to really be very transparent about, here’s the expectations for the property, for the market, here’s how it’s performed historically over a 10 year, 20 year period, including some of those periods of time, like the great financial crisis and how these markets held up. And really just try to make that very clear.

And I’d say our asset team and acquisition team is really focused on being right now just quite picky. And the reality is with the markets we’re in, we’re across 25 cities today, we might underwrite on a month 50 to 100,000 properties, and we might make offers on 100 that meet the criteria that we think, okay, these are a great investment. And then we might win 20 to 30. It’s okay if we don’t win all the properties we offer on. And I think that level of discernment and pickiness, yes we want the best properties at any given time in each of the markets that we’re in has been a big part of how we see a role we can play.

Dean Wehrli:

How many homes do you want to have? Do you have a goal in mind? Or it’s just grow until we think we shouldn’t be growing?

Ryan Frazier:

I think that in general, we think that there’s an opportunity here to help more than a million people access their first property ownership. That is a company goal that we have. And we’ve looked at what is the property volume that we might need to reach that goal? And it looks like we can get there and be a really healthy, sustainable company at 4,000 properties, which is quite tiny when you look at the real estate market overall. Something like 80 million residential units in the country today, and it’s getting to 4,000 could help a million more people access property equity. And we also looked to add new types of investments as well. Last month we launched investing in vacation rentals, so you can invest in equity in an Airbnb and participate in that economy. And we’ll keep adding new investment types as well.

Dean Wehrli:

That was my next question, actually. You do the, let’s call it traditional single family home rented to a tenant, but you also are now more and more doing vacation homes as well.

Ryan Frazier:

Yeah, that’s right. I think that similar to, we look at the data, and I think it’s something like 7% of the population today owns rental property investment. And if you look at number of people invested in the stock market, that number’s more like 55%. And when you talk to retail investors and ask them what do they want to own? What do they view as the best long term investment? Actually more rate rental properties ahead of the stock market. So that 55% in stock, 7% in rental properties is an opportunity we see. How do we get more people exposure?

If you take that down to vacation rentals and these platforms, like Airbnb and VRBO, that number goes down to 1% of the population that’s been able to access these owner economies. And at the same time, so many of us have benefited from using it as a vacation experience, but 1% are accessing the rental incomes and the economics that these communities are generating. So even more challenging than traditional rentals, how can we get more people accessing the ownership economy there is why we’re so excited about that assert.

Dean Wehrli:

But here too, you’re also taking the operational stuff out of the hands of your investor. You’re renting out or you’re putting into VRBO or Airbnb and handling all that, right?

Ryan Frazier:

That’s right. Yep. It’s still purely a passive investment where you’re just accessing the ownership economics, but without any of the work typically involved.

Dean Wehrli:

And you’re charging the $300 cleaning fee that no one knew about until the very end? I’m kidding. I’m joking.

Ryan Frazier:

Yes. Yeah. We’d love some more transparency on some of platforms.

Dean Wehrli:

On prices, yeah. A lot of people would. Yeah. Yeah. It’s like, what? Who are your competitors? When you don’t get that home, is it a mom and pop SFR? Is it an institutionalized SFR? Or is it just the market, just someone buying that home?

Ryan Frazier:

Yeah. I mean, I think there’s some incredible companies that have come in the space and try to make real estate a bit more accessible. We’ve certainly seen some on the commercial side, so investing in commercial properties or even kind of debt. And then we’ve seen folks try to being more the blind pool real estate fund to market. I think when we think about really where’s the market headed and what need are we fulfilling, we look at the hobbyist landlord, I guess if you say, and then some cases accidental landlords, these folks that maybe have one or two rental properties. And it turns out that 75% of rental properties are owned by folks like that.

Dean Wehrli:

Or more.

Ryan Frazier:

Yeah. I think that it could be higher.

Dean Wehrli:

Yeah. It depends how you define it. I mean, it’s the vast bulk of the rental properties are mom and pops, like you described. It’s surprising how little of market share the large institutional actors actually have. So just by pure volume, that’s going to be your main quote unquote competitor.

Ryan Frazier:

Yeah. I think what we see is folks who maybe have one or two rental properties today look to Arrive to diversify by markets and they’re investing that way. And then a lot of our investors are maybe who would be the next generation of that mom and pop landlord. They want to invest in rental property, but they don’t quite have the capital. Or this next generation is a lot more mobile in terms of willing to move throughout their life and for work and kind of valuing that flexibility. And so we really see Arrived as a platform that can facilitate that next generation of the mom-and-pop landlord that might be more remote based investing instead of across the street or a few neighborhoods over in my hometown.

Dean Wehrli:

And when you look to buy, are you being really strategic, that is to say you’re looking to hedge on geographies and be in different geographies, maybe even on price strata? Are you being really, really strategic about where you buy, how you buy?

Ryan Frazier:

I think that we have really looked at how have people acquired and managed rental properties at scale. And our investments team is incredible. They spent nearly a decade helping to build American Homes 4 Rent, which is the second largest single family home real estate investment trust in the country. And really saw that business grow and develop. And I think that brings with it a lot of experience, a lot of what works and what the challenges might be in the space. And we believe a level of rigor in our underwriting and acquisitions to make sure that we’re buying great assets.

I think the one thing that’s unique, and it’s innovation comes out of necessity oftentimes, because of this structure where each home is its own LLC and entity and its performance is managed, we really, we don’t rely on the effect of averaging within a fund. We want and believe in every single home that we buy as a great investment. And we hold ourselves accountable to monitoring and managing the success of each individual home. We can’t rely on the average across all 1,000. We must have each one performing at its absolute best. And I think that that’s quite unique in our approach versus let’s say an institutional operator that is really looking for that pooled averaging effect.

Dean Wehrli:

And you must be pretty omnivorous if you’re looking at, I think you said 50 to 100,000 properties? I mean, would you look pretty much anywhere at any price if it made sense?

Ryan Frazier:

Yeah, I think so. In some ways we’re looking for where do we believe that it’s a great investment thesis? So the markets that we’re in look at the top 100 MSAs, maybe top 150 or so. And we’re looking for markets with high population growth and perhaps some challenges to new development, either because of land or zoning or things. But that population growth with less access to supply to meet that need, that is in a very simple terms what can drive performance for these markets. So we use that as a filter in some ways. And then beyond that, as long as it’s a great market, we believe in the thesis, then yes we’re buying assets, making them available through Arrived investors. And we’ve had over 150,000 people sign up to invest, and everyone has a slightly different opinion of where, what types of properties and what things that they care about as well that lead into that.

Dean Wehrli:

You give me two good segues, because I wanted to end with a couple questions on investment. The first one is, you just touched on it, the metrics. Are there certain metrics, key metrics you’re looking at, like you just said, population growth, to decide where you want to buy?

Ryan Frazier:

Yeah. I think that that is a big one in terms of market selection. The other is, do we think that it’s a market that has employer diversity? Maybe is there a strong university presence there, like a flagship university? But a couple of these dynamics that we’re looking for in a market that might dictate, okay, there’s growth, there’s rigidity in the population and incomes and those types of things. Beyond that, the other thing that I think we really believe is an important part of the acquisition side and performance is just making sure that we’re very accurate, and in some ways conservative on underwriting the rent, and what do we think the market will bear on the income side? Because we’re underwriting to a cash flow expectation, dividends that investors would like to receive, and that is a big driver of returns alongside the property value growth. And so making sure that we’re accurate in terms of our rent underwriting and the data that we’re looking at for that is an important part too.

Dean Wehrli:

Accurate, and it sounds like pretty disciplined too, right? Your hit rate is infinitesimal. But it sounds intentionally so. So you make sure you’re making the right decision or you’ll pass.

Ryan Frazier:

Yeah. I think that that’s a lesson learned, both in terms of the experience in looking at and managing these real estate funds at scale, and also with some of the data background for the team. We use a mix of data collection and automation to do that initial pass. And then once we get to the smaller, the 100 properties that really meet the checkbox criteria, now it’s a much more human review process of the photos, the specific location of the property and how that location has performed within that city, and do we believe in that specific property? And then from that point for the ones we’re making offers on, going through to more of the holistic inspection and human review of that. So it’s very much a data and automation first, but then once we get that curated set, very focused human review of is this the right asset that we want to own for the long term?

Dean Wehrli:

What if the house already had a name, like an older pet that already has a name? Do you feel okay to change that name, or would you …

Ryan Frazier:

I don’t know. If it has a great name already, you just want to keep it. You’d want to keep it.

Dean Wehrli:

If they already answer to that name, I guess you kind of have to. Long term, I mean, again, we talked a minute ago that real estate is a great long term investment, almost always, literally, almost always. Do you get some of your folks, though, who are doing or could they do almost stock day trading or try to short term it? Is that possible and do you get folks trying to do that?

Ryan Frazier:

Yeah, it’s a great question. We really have set it up and really try to focus on the education that real estate is really a long term investment. That has been what’s worked best for people who have done well in real estate historically. So we really tried to put it in ourselves to set those expectations. And so we have a long term thesis, five to seven years for our long term investment properties, 5 to 15 years for the vacation rental segment, just because the longer term cash flows is a big piece of it too. And then within that though, we do know that investors may want to get some liquidity earlier in the process. So we are working on the first version of our liquidity program right now, which would be a quarterly redemption program, where we would facilitate buying back the shares at the current share price, and then immediately reselling those shares to new investors at the same price. And it’s under review at the SEC. Once it’s qualified, at that point we’ll go live.

Dean Wehrli:

Qualified.

Ryan Frazier:

And then, yeah, we’ll do that quarterly.

Dean Wehrli:

Okay. Okay. I mean, what happens now though in terms of the housing market? We see the housing market is starting to change and do negative price change year over year. What happens now? I know you still get rental income, things like that. But the appreciation part of it becomes a little more difficult, or at least a little more long term. How has that changed your outlook?

Ryan Frazier:

It definitely changes our investments team thinking about what markets are they buying in, and just using that as a consideration in their underwriting process and in the types of offers that we’re making. And so we really try to, again, be I think conservative in terms of what we’re doing there, because we are a long term company. We are very much thinking about that, much less so than any day to day things that we might do to try to influence growth or something like that.

Overall, I think the things that have been most interesting, just how quickly interest rates have moved and how do we factor that in? We’ve seen investors wanting to invest in more properties with no debt, so we’ve added more properties that have no mortgage so that they have right now higher dividends, higher cashflow exposure, less property value risk exposure, if you will. So a slightly different kind of profile. And then our thesis broadly is just really making sure that we’re underwriting the rent, we’re using a responsible amount of leverage on properties we are leveraging, such that we always are highly confident in the cash flow and being able to pay out dividends that can provide that baseline return if there’s a downturn or correction. We never want to be in a scenario where we have to sell if there’s property values that go down. And so that’s really how we set things up.

Dean Wehrli:

Let’s end with what’s next. You mentioned you might have some shorter term outlooks with the quarterly assets. And I think you kind of hinted at would you consider non-residential assets in your portfolio?

Ryan Frazier:

I think right now we’re excited about it, continue to add different types of markets and different types of properties within single-family, long-term rental properties. At the same time, we’re building out the vacation rental product. So I think in the last month we’ve funded our first seven and a half million of dollars going into vacation rentals. So pretty exciting to see the interest there. We’re looking to add more markets, more properties for investors there. And I think a lot of people are excited about the post Covid, more folks wanting to get out of their house and wanting to do a little bit more travel. And then beyond that, yeah, definitely thinking about what asset types are next? I don’t know that we can definitively say what that will be yet, but the reality is that Arrived could really work for any type of asset. It’s sort of us thinking about what’s the right timing? What do our investors, what are they excited to invest in? And then go from.

Dean Wehrli:

I have one word, casinos. Maybe actually, I don’t know. But I didn’t mean to press it. You have a lot on your plate. Arrived is still pretty new. It makes sense just to focus on what you’re doing. But I was curious if you were thinking about other assets that was possible. Anyway. Because you’re right, the model makes sense for any kind of real estate asset.

Ryan Frazier:

Yeah. I think we love the ideas and love hearing from folks on what we should be looking at too.

Dean Wehrli:

Casinos.

Ryan Frazier:

I’ll throw your casino idea into the hat for the investment team after we get off the chat here.

Dean Wehrli:

Ryan, thank you so much for coming on. This is one of those ones I want to know more about this operation, this company and what they’re doing. So this has been very interesting for me and I hope for all of our listeners.

Ryan Frazier:

Awesome. Yeah. Thank you so much for having me on. This has been a lot of fun. And yeah, hope to keep in touch from here. Reach out anytime.

Dean Wehrli:

You too. I appreciate it.

Thanks for listening, everyone. This has been Dean Wehrli for the New Home Insights podcast. And we’ll see you in a couple of weeks when we’re going to bring you nine tips on how to get the most out of your makeup regimen. I’m kidding. It’ll be housing. I’m just joking. It’ll be something on housing. I just don’t know what. We’ll see you then.


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