Current dividend yield: The Arrived Private Credit Fund aims to generate annual dividends of 7-9%, factoring in all expenses and fees.
Target yield: The Arrived Private Credit Fund is continually acquiring new loans that, after fees and expenses, we expect will result in a dividend rate of 2-3% above short-term treasury yields.
Return type: Returns for the Arrived Private Credit Fund will come primarily from dividends based on interest payments, with little to no share value appreciation.
Return variability: The Arrived Private Credit Fund will acquire loans and distribute interest payments to investors. Dividends may vary based on collected interest and the underlying terms of new loans added to the fund.
Arrived Platform Returns Overview
Additionally, below is our guide to potential returns on the Arrived platform, including the different ways that returns may be obtained, the estimated historical returns per the different investment strategies, and how volatility and leverage can impact potential returns.
Investing on the Arrived platform can deliver returns to investors in two ways: Dividends and Appreciation.
Estimated Historical Return Range
The table below shows the estimated historical return range for a diversified portfolio of properties for each of our three main investment strategies, Single Family Residential (both individual properties & the Single Family Residential Fund), Vacation Rental properties, and the Private Credit Fund. Actual returns for individual properties will vary and may over or underperform these ranges. For our individual property investments, diversifying across several properties and across asset types can be a helpful strategy for minimizing individual property risk.
Past performance does not guarantee future results and there is no guarantee this trend will continue. Note: The above scenarios are for illustrative purposes only and are not intended to be used to estimate the returns of an individual property.
The table is estimated by combining the 20-year historical home price appreciation from the Zillow Home Value Index (ending Q1 2023) and average historical dividend yields from the Arrived portfolio (ending Q1 2023). These data sources were combined to estimate a hypothetical IRR for each asset type and leverage classification and then rounded to whole numbers. The single family residential and vacation rental calculations also assume an average hold period of 7 years for SFRs and 10 years for VRs, 6% property disposition costs, and an average annual net operating income increase of 3% for SFRs and 5% for VRs. The leverage classification estimates an average of 63% financing and a 4.75% interest rate, which was selected based on existing properties with leverage at the time of calculation.
The private credit fund range is estimated by combining 2024 market data for interest rates, loan term lengths, and credit loss rates from origination partners and loan sources.
Historical Returns & Specific Product Guidance
To learn more about the historical returns and returns guidance for the individual investment strategies, you can visit the below dedicated resources.
Individual Single Family Residences & Vacation Rentals: Our Historical Returns page showcases the total returns, along with the rental income and appreciation for every individual property in the Arrived portfolio.
Single Family Residential Fund: Visit the Single Family Residential Fund page itself to view the historical returns for the fund.
Arrived Private Credit Fund: Visit the Arrived Private Credit Fund page to view the returns content along with the Anticipated Annual Cash Flow for the fund.
Potential Returns and Volatility
The chart below shows the wider range of potential return outcomes that can be expected from single-family residential rental homes, vacation rental properties, and the Private Credit Fund. It illustrates how different investment strategies may have higher potential returns but also come with higher potential downsides. This is meant for illustrative purposes only and may not accurately reflect the relative risk and potential returns. Actual results will vary.
Leverage
In general, adding leverage to an investment widens the range of potential returns, increasing both the average anticipated returns and potential downside.
The chart below illustrates the impact of an investment that includes leverage versus an investment that does not include leverage. As leverage is added, the range of potential returns will widen, including the potential for a larger decline.
The Single Family Residential fund and any individual property designated with the “Strategic Refinance Candidate” tag does not initially have leverage at the time of funding, but Arrived may seek to add financing during the investment period if favorable loan terms and interest rates are available.
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