When looking to diversify your investment portfolio, real estate is one of the best options, but it isn’t always easy to get started. Finding the right place to invest can be a challenge, but companies like Arrived Homes, Groundfloor, and Roots make real estate investment easy with transparent platforms that are both easy to use and easy to understand. At the end of the day, it’s up to the investors to determine what is best for their current situation.

If you’re looking for more flexibility in your investments, Arrived may suit you best as you can purchase fractional investments in residential or vacation homes, or invest in a portfolio of residential properties.

Groundfloor offers a platform to both borrow money to flip and renovate homes as well as the opportunity to invest in these property loans (debt) and receive monthly interest payments, making it a fantastic option if you’re looking for a short-term (6-18 months) investment.

If you’re interested in a residential-focused real estate portfolio with few fees, a low minimum investment, and a fund that has a one-of-a-kind social impact on its renters, Roots is for you.

Arrived Homes, Groundfloor, and Roots all offer great ways to invest in real estate without the hurdles of things like property management or rent collection.

Below you'll find an in-depth breakdown of Roots, Arrived Homes' single family rental fund, and Groundfloor's platform, highlighting their differences across 4 dimensions: investment type, minimums, liquidity, and average returns.

Property Type

Roots

Roots' REIT offers a portfolio of residential and small multi-family rental properties. Roots has a unique model where the residents of the properties get invested in the fund if they are good renters (pay rent on time, take care of the property, and are good neighbors). This has led to low vacancy, low turn costs, and high returns for its investors, as you’ll see below.

Arrived Homes

Arrived offers three ways to invest: you can purchase a fractional share of a vacation rental, you can purchase a fractional share of a single-family property, or you can invest in the single-family residential fund, which will be the focus of this article.

Groundfloor

Groundfloor offers investments and loans for residential properties in need of renovation and fix-up. You can choose to invest in a single property or into a project, but it’s important to note that an investment is an investment in debt – not in equity in the property. Once the renovations are made, ideally, the investor is paid back with interest.

Minimum Investments, Fees & Liquidity

Roots

Roots allows you to invest with a $100 minimum. Roots has a low fee structure, with only a $5 transaction fee per investment and a $3 transaction fee on any recurring investment. If you need to liquidate your funds before one year, you can, but there is a 6% early withdrawal fee. There is no withdrawal fee after one year.

Roots distributes to investors quarterly, providing investors the option to reinvest or cash out their distributions at that point in time. Roots offers the ability to liquidate quarterly as well, $100k or up to 5% of the fund.

Arrived Homes

Investment in its single-family residential fund has a 0.25% management fee and other potential fees which may include but are not limited to closing costs, offering costs, property renovations, sourcing fees, holding costs, operating expenses, and more. These investments are positioned as longer-term investments with a six-month holding period on withdrawals. For those who are looking to liquidate earlier than 5 years, there is a 1-2% cost associated with doing that.

Groundfloor

Groundfloor requires a $10 minimum investment to get started, and like Arrived Homes and Roots, it's open to accredited and nonaccredited investors. If you’re an investor, Groundfloor does not have any fees.

Typically, the average hold time for Groundfloor investments is 4-18 months, and investors receive monthly small interest payments before receiving the final payment (all the money that is owed) after the property has been sold.

Performance

Roots had an average annual return of 17.17% as of July 10, 2024, and has returned 51.5% from July 1, 2021- July 10, 2024.

Arrived’s average total historical returns for single-family residential properties have ranged between 6-10%.

Since its inception, Groundfloor has consistently averaged 10% annual returns for its investors.

Even though historically all three companies have delivered returns to investors, it’s important to remember that past results do not determine future success. Risks are always present when investing your money, so it’s important to understand what those risks are before making your first investment.

Ready To Get Started? Invest With Roots

Imagine owning real estate where your renters wanted it to succeed as much as you do.

Start investing with as little as $100, and own a piece of the only real estate fund that creates wealth for both its investors and its renters. It took us years to build Roots, but you can invest in as little as 5 minutes.

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Sources

• Roots - Social Impact
• Roots - Performance
• Arrived - Why are homes held in a Series LLC
• Arrived - How does Arrived make money?
• Arrived - What fees do investors pay to property managers?
• Arrived - Arrived Single Family Residential Fund
• Arrived - What returns can I expect from Arrived properties?
• Arrived - Single Family Residential Fund
• Groundfloor - Invest
• Groundfloor - What is Groundfloor?

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