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Why are Arrived investments designed only for long term holds?
Why are Arrived investments designed only for long term holds?
Korin Hedlund avatar
Written by Korin Hedlund
Updated over a week ago

Arrived strives to give investors the opportunity to build wealth through real estate and historically, real estate returns have been maximized when treated as a long-term investment over multiple years. As a result we have designed the Arrived platform and our products for investors who are looking to build wealth over the long term. We do not recommend Arrived for investors that wish to hold their investment for days, weeks or even months.

There are three main reasons that we have designed Arrived investments for long term holds:

  1. Steady Growth: Real estate has proven to be one of the most stable and less volatile assets over the long term. While that can increase the odds of achieving consistent returns, that also means that it is less feasible to obtain very high returns in a short period of time like is possible with higher volatility returns like high risk stocks or cryptocurrency. As a result, in order to maximize the wealth building, investors need time for the investment to accumulate both the rental income and property value appreciation. Time can often be the biggest advantage for a real estate investor.

  2. High transaction costs: Buying and selling real estate has high transaction costs that need to be amortized over a long investment period. These costs can include real estate agent fees, title and escrow fees, mortgage origination fees…etc. By holding an investment property longer, you are allowing more time for the rental income and appreciation to surpass those high initial transaction costs.

  3. Difficulty of Timing Market Cycles: Like most asset classes, real estate prices and returns often go through cycles, both up and down. Investors with shorter investment holding periods are more likely to have to sell during a down cycle. Investors that have a longer investment holding period are more likely to be able to ride out the down cycle and then sell their investments when their investment returns are maximized. For example, a real estate investor that bought a property in 2008 at the peak of the market but was forced to sell in 2010 probably didn't receive great investment returns. However a real estate investor that bought a similar property in 2008 and was able to hold for a much longer period of time was more likely to achieve strong investment returns just by the fact that they were able to hold over the long term.

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