Share Prices are reflective of the overall value of your investment. As a reminder, when you invest in a property on Arrived, you buy shares in an LLC that owns the property. The Share Price values include the value of all the assets and liabilities held by the LLC.
Our Investments team uses 3rd party property value estimates to approximate the property's current value. These professional data sources estimate the home's value, and then our investments team does a manual review to ensure no extreme outliers in the data.
That new property value is added to the balance sheet for the LLC. The LLC's biggest asset is the property, but there are other valuable assets like the cash reserve. We also factor in the liabilities, such as the loan balance and accrued property taxes. The result estimates the total equity investors own in the LLC.
We also make some adjustments for the upfront fees involved in the investment. This includes the Closing, Offering, Holding costs, plus the Arrived sourcing fee that are meant to be for an investment period of at least 5 years. Accordingly, we structure these costs so that the share price reflects only the prorated fees up through that time.
Reduction in cash reserves from starting operations and servicing loans can negatively impact the share valuation initially. The Share Price value may go up or down, and the actual investment returns will largely depend on the property’s eventual sale price at the end of the investment period.
Share Price values are updated beginning 6+ months (Single-Family Residential) or 12+ months (Vacation Rental) after initial property funding, at the next quarterly update. After that point share prices are updated each quarter going forward. Check out this article on how share prices are calculated.
You can learn more about share prices in our Property Share Price blog post.
More details specific to Vacation Rental share price calculation will be added after the first quarterly update and may differ from Single Family Residential calculations.