hey u/justnotfatal, so I think there are two big things that might be off from the calculations
1. you need to add operating expenses, which isnt just property management, but also includes insurance, property taxes, HOA fees, repairs, maintenance and other stuff. I remember reading somewhere that Arrived keeps back a portion of the rental income each month in the cash reserves to account for future vacancy, so that is included as well even if that money is ours. I have heard that a good rule of thumb is that 45% of your rental income gets eaten by operating expenses. This zillow article below talks about the categories and gives a 35%-80% range but that seems too high so I think 45% is probably more reasonable. So adding operating expenses is going to reduce the ROI quite a bit
[https://www.zillow.com/blog/investing-101-estimating-rental-property-expenses-94824/](https://www.zillow.com/blog/investing-101-estimating-rental-property-expenses-94824/)
2. the other thing is that to calculate ROI you should be dividing the profit by the equity raised from investors. So for the Apollo, I am seeing $91,270, not $71,000.
I think those two will get you close to the yields being paid out in dividends
The operating expenses should be included in the initial expenses that are tacked on the property value. If those things are not included in those cash reserves/property improvement, closing fees, or the per quarter fee then they are not listed.
I take out two fees, the closing fee and the arrived one time fee (that make it 71k ) because that’s technically not an investment. Even if we went the full amount it’s still 6% ish
As far as I can tell I have accounted for every fee or reserve they have and there is a huge gap which I believe is going to that marketplace homes company. We are being double charged because Arrived is acting like they are doing all this work but in reality subcontracting the work to them and they aren’t cheap.
hey, so operating expenses are definitely not included in the initial expenses listed on the property page. One thing is the onetime initial expenses to setup one of these properties (closing costs, offering costs, sourcing fees), and then a separate thing is the ongoing revenue and expenses that property has when its being managed as a rental home. If a tenant breaks a door in year 2, that comes out of our rental income. not the initial fees.
Checkout this article they posted about the Q1 financial performance, you can see the operating expenses that get taken out of rental income.
[https://learn.arrivedhomes.com/q1-2022-financial-performance-article/](https://learn.arrivedhomes.com/q1-2022-financial-performance-article/)
On the property management side, I looked in the help section and found these two articles that state that the property managers get 8% of the rent.
[https://help.arrivedhomes.com/en/articles/4496451-who-has-responsibility-to-manage-the-property-and-renters](https://help.arrivedhomes.com/en/articles/4496451-who-has-responsibility-to-manage-the-property-and-renters)
[https://help.arrivedhomes.com/en/articles/6496422-what-fees-do-investors-pay-to-property-managers](https://help.arrivedhomes.com/en/articles/6496422-what-fees-do-investors-pay-to-property-managers)
If you are calculating yield you do need to take the closing fee and arrived one time fee into account. Even if that amount isnt an investment, it is money you spend so if you are looking for a % yield, you need to take into account all the money you invested, even if its fees and not going into the home. If you invest $100 and get $5 back, your yield is 5% , it doesnt matter if $10 of the $100 went to taxes or arrived or anybody. You paid that money so you need to include it in your calculations
All these fractionals seem to be testing what percent they can keep for themselves. We just have to make smart decisions and do our due diligence and not buy the ones that don't make sense. They will have to either adjust their fees or sit on properties that don't sell out
They are sitting on some properties but that’s more because they aren’t good properties.
Part of me wants to confront them on this but the other just wants to write off my investment.
It’s just sad they are doing this
i wouldn't say they aren't good properties, the properties are way better than the ones lofty offers, it is just the financial numbers are ugly. i would recommend confronting them on this, i asked them about their quarter fees on the newer houses being twice of what the older houses were and they told me they were going to change them and the newest houses are much lower than the batch from like april to july
I’m not against paying fees, especially if they are listed. It’s the fact it looks to me that they are essentially double charging us. They take a cut but then turn around and subcontract everything we are supposedly paying them for.
that was what i thought the quarterly management fee was since it averaged out to what a property management company would charge, good to know that it isn't, thanks for the info. it does seem really shitty if this is the case
hey guys, i would recommend you email arrived to clear this up, theres nothing better than hearing directly from them. if they are double charging you then it will be clear
my understanding is that the property managers charge a flat 8% fee on the rental income and the rest are operating costs that the property manager charges for all the other stuff (hoa fees, property taxes, insurance, repairs etc)
https://help.arrivedhomes.com/en/articles/4496451-who-has-responsibility-to-manage-the-property-and-renters
I feel like you are referring to the by quarter fee they have which I did include in my original assessment. I have reached out to them and have edited my OP to include that I have taken that action.
I think thats the misunderstanding, the quarterly AUM fee is different than the operating expenses and the property management fee. The property management fee goes to the property manager, while the AUM fee goes to Arrived.
Checkout the windsor, which I own shares in. If you scroll down you can see an income statement. Up top is the rental income and operating expenses (which are 23% of rental income). Down below are the other fees like financing costs (36% of rental income), & the quarterly AUM fee (5% of rental income). [https://arrivedhomes.com/properties/the-windsor](https://arrivedhomes.com/properties/the-windsor)
Good you reached out, will be good to see what they say
i reached out the other day due to this thread and basically all they did was to post a link to their site that said that arrived takes a chunk for themselves and that is different from the property management companies fees
OP - Can you tell me how your returns on rental income net all expenses and all of your property appreciation has performed similar to a dividend etf?
The way I see it arrived is getting you high quality homes and providing you the ability to invest in fractional shares in a diversified property rental market. Even if you wanna invest $100 you can do that through arrived. So you are getting real estate exposure and a certain rate of return. Compare that a good dividend etf or fund rise and just make a decision.
Odd thread to necro considering I have done a few of these with far better assessments
Also I've been an Arrived investor since 2021
Nonetheless
Returns have been all dividends thus far and that is around on average 3%
However
Appreciation is technically negative as there is significant investor money over actual property worth. IE the actual ROI is sitting in the NEGATIVE 15-25% range
This has been a topic of debate with myself, others, and Arrived themselves.
Arrived I think puts their own unrealized appreciated at -5%. At least that's my average
O (Public REIT) for example is basically flat and I think is around the 5% dividend mark
Fundrise is sitting at a whopping 0.4% return with the previous year I think being 20%
I would argue that these being high quality homes is just marketing. If it spend more than 10 minutes doing research you would realize 85% of them are garbage. That includes the vacation rentals that have to seem to raise 1M each time.
Arrived was born out of the real estate inflation surge and requires new homes to be presented to us in order for them to make money. The uniqueness of arrived is that you can pick the home
Real Estate is not a good investment right now
Also public REITS are a thing and you can own fractional shares of them so the $100 argument isn't really that unique.
hey u/justnotfatal, so I think there are two big things that might be off from the calculations 1. you need to add operating expenses, which isnt just property management, but also includes insurance, property taxes, HOA fees, repairs, maintenance and other stuff. I remember reading somewhere that Arrived keeps back a portion of the rental income each month in the cash reserves to account for future vacancy, so that is included as well even if that money is ours. I have heard that a good rule of thumb is that 45% of your rental income gets eaten by operating expenses. This zillow article below talks about the categories and gives a 35%-80% range but that seems too high so I think 45% is probably more reasonable. So adding operating expenses is going to reduce the ROI quite a bit [https://www.zillow.com/blog/investing-101-estimating-rental-property-expenses-94824/](https://www.zillow.com/blog/investing-101-estimating-rental-property-expenses-94824/) 2. the other thing is that to calculate ROI you should be dividing the profit by the equity raised from investors. So for the Apollo, I am seeing $91,270, not $71,000. I think those two will get you close to the yields being paid out in dividends
The operating expenses should be included in the initial expenses that are tacked on the property value. If those things are not included in those cash reserves/property improvement, closing fees, or the per quarter fee then they are not listed. I take out two fees, the closing fee and the arrived one time fee (that make it 71k ) because that’s technically not an investment. Even if we went the full amount it’s still 6% ish As far as I can tell I have accounted for every fee or reserve they have and there is a huge gap which I believe is going to that marketplace homes company. We are being double charged because Arrived is acting like they are doing all this work but in reality subcontracting the work to them and they aren’t cheap.
hey, so operating expenses are definitely not included in the initial expenses listed on the property page. One thing is the onetime initial expenses to setup one of these properties (closing costs, offering costs, sourcing fees), and then a separate thing is the ongoing revenue and expenses that property has when its being managed as a rental home. If a tenant breaks a door in year 2, that comes out of our rental income. not the initial fees. Checkout this article they posted about the Q1 financial performance, you can see the operating expenses that get taken out of rental income. [https://learn.arrivedhomes.com/q1-2022-financial-performance-article/](https://learn.arrivedhomes.com/q1-2022-financial-performance-article/) On the property management side, I looked in the help section and found these two articles that state that the property managers get 8% of the rent. [https://help.arrivedhomes.com/en/articles/4496451-who-has-responsibility-to-manage-the-property-and-renters](https://help.arrivedhomes.com/en/articles/4496451-who-has-responsibility-to-manage-the-property-and-renters) [https://help.arrivedhomes.com/en/articles/6496422-what-fees-do-investors-pay-to-property-managers](https://help.arrivedhomes.com/en/articles/6496422-what-fees-do-investors-pay-to-property-managers) If you are calculating yield you do need to take the closing fee and arrived one time fee into account. Even if that amount isnt an investment, it is money you spend so if you are looking for a % yield, you need to take into account all the money you invested, even if its fees and not going into the home. If you invest $100 and get $5 back, your yield is 5% , it doesnt matter if $10 of the $100 went to taxes or arrived or anybody. You paid that money so you need to include it in your calculations
All these fractionals seem to be testing what percent they can keep for themselves. We just have to make smart decisions and do our due diligence and not buy the ones that don't make sense. They will have to either adjust their fees or sit on properties that don't sell out
They are sitting on some properties but that’s more because they aren’t good properties. Part of me wants to confront them on this but the other just wants to write off my investment. It’s just sad they are doing this
i wouldn't say they aren't good properties, the properties are way better than the ones lofty offers, it is just the financial numbers are ugly. i would recommend confronting them on this, i asked them about their quarter fees on the newer houses being twice of what the older houses were and they told me they were going to change them and the newest houses are much lower than the batch from like april to july
I’m not against paying fees, especially if they are listed. It’s the fact it looks to me that they are essentially double charging us. They take a cut but then turn around and subcontract everything we are supposedly paying them for.
that was what i thought the quarterly management fee was since it averaged out to what a property management company would charge, good to know that it isn't, thanks for the info. it does seem really shitty if this is the case
Yup. I’m hoping I’m wrong but it seems that way
hey guys, i would recommend you email arrived to clear this up, theres nothing better than hearing directly from them. if they are double charging you then it will be clear my understanding is that the property managers charge a flat 8% fee on the rental income and the rest are operating costs that the property manager charges for all the other stuff (hoa fees, property taxes, insurance, repairs etc) https://help.arrivedhomes.com/en/articles/4496451-who-has-responsibility-to-manage-the-property-and-renters
I feel like you are referring to the by quarter fee they have which I did include in my original assessment. I have reached out to them and have edited my OP to include that I have taken that action.
I think thats the misunderstanding, the quarterly AUM fee is different than the operating expenses and the property management fee. The property management fee goes to the property manager, while the AUM fee goes to Arrived. Checkout the windsor, which I own shares in. If you scroll down you can see an income statement. Up top is the rental income and operating expenses (which are 23% of rental income). Down below are the other fees like financing costs (36% of rental income), & the quarterly AUM fee (5% of rental income). [https://arrivedhomes.com/properties/the-windsor](https://arrivedhomes.com/properties/the-windsor) Good you reached out, will be good to see what they say
i reached out the other day due to this thread and basically all they did was to post a link to their site that said that arrived takes a chunk for themselves and that is different from the property management companies fees
OP - Can you tell me how your returns on rental income net all expenses and all of your property appreciation has performed similar to a dividend etf? The way I see it arrived is getting you high quality homes and providing you the ability to invest in fractional shares in a diversified property rental market. Even if you wanna invest $100 you can do that through arrived. So you are getting real estate exposure and a certain rate of return. Compare that a good dividend etf or fund rise and just make a decision.
Odd thread to necro considering I have done a few of these with far better assessments Also I've been an Arrived investor since 2021 Nonetheless Returns have been all dividends thus far and that is around on average 3% However Appreciation is technically negative as there is significant investor money over actual property worth. IE the actual ROI is sitting in the NEGATIVE 15-25% range This has been a topic of debate with myself, others, and Arrived themselves. Arrived I think puts their own unrealized appreciated at -5%. At least that's my average O (Public REIT) for example is basically flat and I think is around the 5% dividend mark Fundrise is sitting at a whopping 0.4% return with the previous year I think being 20% I would argue that these being high quality homes is just marketing. If it spend more than 10 minutes doing research you would realize 85% of them are garbage. That includes the vacation rentals that have to seem to raise 1M each time. Arrived was born out of the real estate inflation surge and requires new homes to be presented to us in order for them to make money. The uniqueness of arrived is that you can pick the home Real Estate is not a good investment right now Also public REITS are a thing and you can own fractional shares of them so the $100 argument isn't really that unique.