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The real estate market has traditionally been seen as an exclusive space for high-net-worth individuals, but thanks to fractional property investment platforms like Arrived Homes, this is changing fast. These platforms allow everyday investors to own a fraction of a property, often with just a few hundred dollars. As of 2023, the fractional property market was valued at over $500 million, with a projected growth rate of 12% annually. This shift is making property investment accessible to a wider audience, transforming how people think about real estate.
Another great example of this innovation is CrowdStreet, an app focused on commercial real estate. CrowdStreet has raised more than $2 billion across over 500 deals, with individual investments hitting $641 million in 2020 alone.
The success of such platforms shows the huge demand for real estate investment opportunities that are more accessible and scalable than ever before.
In this blog, we’ll walk through the key steps to building a successful property investment app like Arrived Homes, from legal requirements to engaging users—helping you turn your ideas into a thriving business.
Overview of the Arrived Homes App
Arrived Homes, now simply called Arrived, is a real estate investment app designed to make property investing accessible to a wider audience. It allows users to purchase fractional shares in pre-vetted, carefully selected properties, which means they don’t need large amounts of capital to get started.
How it works?
Arrived handles all the complicated aspects of property management, including tenant relations and maintenance, allowing users to earn passive income. There are two main ways users can benefit:
- Dividends: Users receive rental income every quarter.
- Appreciation: Users may also benefit from potential increases in property value when the investment period ends.
Key Features
- Low Entry Barrier: Users can start investing with as little as $100.
- Diverse Options: Users can choose to invest in individual rental homes, vacation properties, or in the Single Family Residential Fund, which operates as a REIT.
- Professional Management: Arrived takes care of all property-related tasks, so users don’t have to deal with the hassles of being a landlord.
Key Market Takeaways for Fractional Property Investment Apps
According to AlliedMarketResearch, the global real estate investment market, valued at around $11.44 trillion in 2021, is set to grow to about $30.58 trillion by 2031, with a CAGR of 10.7%. This impressive growth is being driven in part by the rise of fractional property investment apps, which are making it easier for more people to invest in real estate.
Source: AlliedMarketResearch
These platforms allow individuals to invest with a smaller amount of capital, opening up real estate as an investment opportunity for a much broader audience.
Two main factors are behind the success of these platforms: affordability and technology. By reducing the amount of money needed to get started, fractional property apps make it possible for a wide variety of people, even those who may not have considered real estate before, to participate in the market.
For example, platforms like Roofstock allow users to invest in rental properties without the hassle of managing them. At the same time, CrowdStreet offers access to commercial real estate projects with low minimum investment requirements. These technological advancements are not only making investing easier but are also improving transparency and security for users.
Additionally, major partnerships and regulatory changes in places like California and New York are helping to create a safer and more trustworthy environment for fractional ownership. This boosts investor confidence and supports the growth of this emerging market.
developers, with combined 50000+ coding hours experience
A Perfect Time to Invest in Fractional Property Investment App Development
Fractional ownership is revolutionizing the real estate investment world by allowing multiple investors to buy shares in a single property. This lowers the barrier to entry, making real estate more accessible to people who might not have the capital to buy entire properties. With real estate prices continuing to rise, many individuals are looking for ways to diversify their portfolios without committing to a full property purchase. A platform that offers this type of investment opens up a world of opportunities for a growing market of retail investors.
Take a look at the success of platforms like Roofstock, which has facilitated over $6 billion in transactions since 2016. They’ve created a user-friendly marketplace that makes buying, selling, and managing rental properties simple, highlighting the increasing demand for hassle-free investment options.
Similarly, CrowdStreet has raised over $2 billion across 500+ commercial real estate deals, proving that fractional ownership is not just a trend, but the future of real estate investment.
What makes these platforms so profitable is their scalability. Once the technology is in place, it’s easy to expand into new markets with little additional cost. Revenue can come from transaction fees, property management, and subscriptions, which means multiple income streams. The more the platform grows, the more it has the potential to earn from higher commissions.
Business Model of the Arrived Homes App
Arrived Homes has created a unique and accessible way for people to invest in real estate. Instead of requiring large amounts of capital, the platform allows individuals to buy fractional shares of rental properties, starting with just $100. This opens up the opportunity for non-accredited investors to generate passive income through real estate, which was previously reserved for wealthier individuals.
Revenue Streams
Arrived Homes generates income through three main channels:
- Agent Rebates: When the company acquires a property, it receives a rebate from the real estate agent handling the transaction. This rebate, paid by the seller, doesn’t affect the amount investors put in, allowing Arrived to keep its fees lower than traditional investment methods.
- Sourcing Fees: These are one-time fees that are added to the share price of each property. They cover the costs of financing and preparing the property for rental. The sourcing fee is typically between 3.5% and 5% of the property’s purchase price, depending on whether it’s a long-term rental or a vacation home.
- Asset Management Fees: Arrived charges an annual fee based on the total value of assets under management. This fee is around 0.1% to 0.3% per quarter, which works out to about $1 to $3 for every $1,000 invested. It covers ongoing services like tax form preparation, insurance management, and other operational tasks.
Financial Performance
As of the first quarter of 2024, Arrived Homes reported about $1.1 million in dividend income, marking a 16% increase from the previous quarter. The company manages over 350 properties, which collectively generated an average annualized dividend of around 3.8% for single-family homes and 3.4% for vacation rentals. This demonstrates the platform’s ability to deliver consistent returns to its investors.
Funding Rounds
Arrived Homes has raised significant capital to fuel its growth:
- $37 million in seed funding and debt financing in June 2021. This round was led by Core Innovation Capital and attracted high-profile investors like Jeff Bezos and Spencer Rascoff.
- These funds are being used to expand their portfolio of rental homes, with plans to grow in states like Arkansas and North Carolina.
Development Steps for a Fractional Property Investment App like Arrived Homes
Developing a fractional property investment app involves creating a seamless platform that caters to investors and ensures compliance with legal and financial regulations. Here are the key steps for building such an app:
1. Define the App’s Core Features
Identify essential features such as property listings, fractional ownership options, user account management, digital payments, dividend distribution, and real-time property updates. Integrate property performance dashboards and push notifications for updates.
2. Conduct Market Research
Analyze market trends, competitors, and target audience needs. Study successful platforms like Arrived Homes to identify user preferences and create a value proposition that addresses gaps in the market.
3. Establish Legal and Regulatory Compliance
Ensure the platform complies with real estate, securities, and financial regulations in all target regions. Collaborate with legal experts to structure the platform for accredited and non-accredited investors while adhering to tax laws.
4. Design a User-Centric Interface
Develop an intuitive UI/UX design that simplifies navigation. Include features like property search filters, investment history, and account overviews. Use a responsive design to ensure compatibility across devices.
5. Develop a Robust Backend Architecture
Build a scalable backend system to handle property data, user transactions, and document management. Implement APIs for integration with third-party services like payment gateways, property management software, and analytics tools.
6. Implement Secure Payment Solutions
Integrate secure payment gateways to facilitate seamless transactions. Enable features such as digital wallets, ACH transfers, and credit/debit card payments. Prioritize encryption and fraud detection mechanisms.
7. Integrate Property Management Features
Incorporate tools for property acquisition, tenant management, rental income tracking, and maintenance updates. Collaborate with property management companies to synchronize operations through the app.
8. Incorporate Data Analytics and Reporting
Enable real-time tracking of property performance, rental yields, and user investments. Offer detailed reports on dividends and property appreciation to enhance transparency and investor confidence.
9. Test, Launch, and Optimize
Conduct rigorous testing to ensure the app operates flawlessly. Launch the app with a pilot phase to gather user feedback. Continuously optimize based on analytics and user input to improve functionality and user experience.
Cost of Developing a Fractional Property Investment App like Arrived Homes
| Development Stage | Description | Estimated Cost Range |
| 1. Research & Market Analysis | – Competitive Analysis: Studying existing platforms (e.g., Arrived Homes, Roofstock, Fundrise) to understand their strengths, weaknesses, and user experience.- Market Research: Identifying the target audience, their investment preferences, and the competitive landscape.- Feasibility Study: Evaluating business model viability, revenue streams, and challenges. | $2,000 – $8,000 |
| 2. Frontend Development | – UI/UX Design: Creating an intuitive and visually appealing user interface. Cost Range: $1,000 – $5,000- Development: Building the front end using frameworks like React, Angular, or Vue.js. Cost Range: $4,000 – $25,000 | $5,000 – $30,000 |
| 3. Backend Development | – Property Listing & Management: Features for property owners to list and manage properties. Cost Range: $2,000 – $10,000- Ownership Tracking: System for tracking fractional shares and holdings. Cost Range: $3,000 – $15,000- Payment Gateway Integration: Secure integration with payment processors like Stripe or PayPal. Cost Range: $1,000 – $5,000- Investor Dashboard: Tools for tracking investments, property performance, and portfolio management. Cost Range: $2,000 – $10,000- Security Measures: Robust measures to protect user data and prevent fraud. Cost Range: $2,000 – $10,000 | $10,000 – $50,000 |
| 4. App Development (Optional) | – Basic Mobile App: Developing a simple app for property browsing and portfolio tracking.- Advanced Features: Implementing features like push notifications, in-app messaging, and offline access. | $3,000 – $15,000 |
| 5. Legal & Regulatory Compliance | – Legal & Regulatory Advice: Consulting with legal professionals to ensure compliance with securities laws and regulations. | $2,000 – $10,000 |
| 6. Testing & Quality Assurance | – Functional Testing: Ensuring all platform functionalities work as expected.- User Acceptance Testing: Gathering feedback from users to refine the platform. | $1,000 – $5,000 |
Total Estimated Cost: $10,000 – $100,000
Factors Affecting the Development Cost of a Property Ownership Platform
Several factors can significantly impact the development cost of a fractional property investment app like Arrived Homes.
- Integration with Property Data Providers: Integrating with reliable property data providers like Zillow or Redfin to enhance property information and valuations.
- Compliance with Securities Regulations: Ensuring the platform complies with complex securities laws and regulations related to fractional ownership.
- Integration with Property Management Systems: Integrating with property management software to streamline property management tasks and provide real-time data to investors.
- Development of Sophisticated Risk Assessment Models: Creating models to assess property risk and provide investors with insights into potential returns and risks.
Conclusion
Fractional property investment apps are making real estate investing more accessible to people who might not have had the capital to get involved before. For businesses, creating a platform like this opens up a chance to tap into a growing market. They can earn revenue through transaction and subscription fees, share in the profits from property appreciation and rental income, and even offer premium services to investors looking for extra features or insights. It’s a win-win for both investors and businesses looking to innovate in real estate!
Looking to Develop a Fractional Property Investment App like Arrived Homes?
At Idea Usher, with over 500,000 hours of coding experience, we’re here to help you create a powerful and user-friendly platform that makes real estate investing accessible to everyone. We specialize in building innovative solutions for the fractional property market, giving investors of all backgrounds the tools they need to diversify their portfolios. Ready to turn your idea into reality? Reach out to us today for a free consultation – let’s make it happen!
FAQs
Q1: How to develop a fractional property investment app?
A1: To develop a fractional property investment app, begin by identifying the key features and user experience, such as property listings, investment opportunities, secure payment systems, user accounts, and legal documentation. Select an appropriate technology stack for both mobile and back-end development. Collaborate with real estate experts and legal advisors to ensure the platform complies with all regulations. Additionally, integrate payment gateways, ensure high data security standards, and focus on creating an intuitive interface for seamless user interaction.
Q2: What is the cost of developing a fractional property investment app?
A2: The cost of developing a fractional property investment app varies based on the complexity of the features, design, and the development team’s location. The price is influenced by factors such as the technology stack used, the number of integrations, the level of customization, and the overall project scope. More complex platforms with advanced features like AI recommendations or custom analytics tend to be more expensive, while simpler apps are more affordable.
Q3: What are the features of a fractional property investment app?
A3: The features of a fractional property investment app include property search and listings, options for fractional ownership, secure payment systems, user profiles, investment tracking, transaction history, and legal documentation management. It also offers features like real-time market updates, notifications, advanced analytics, communication tools, and a marketplace for buying or selling shares in properties, ensuring a transparent and user-friendly investment experience.
Q4: How does a property investment app make money?
A4: A property investment app can earn revenue through transaction fees or commissions on investments, either as a percentage of the total investment or a flat fee per transaction. Additional income can come from offering premium features, such as advanced analytics or exclusive investment opportunities. Subscription models for access to premium content or services, along with partnerships with real estate developers or institutional investors, can also generate revenue for the platform.
