While investors own 100% of the equity in each home, Arrived may utilize financing to provide positive leverage on the property in order to maximize the return for investors. Typically the leverage percentage will be set at either 0%, 50%, or 70%. The factors that determine if we use financing or not may include considerations such as the yield for that property, the interest rate at the time, or the predicted volatility of earnings.
With each option, there are trade-offs and the amount of available equity changes based on the percentage of financing. The mortgages are non-recourse meaning that investors are not personally liable for the debt, nor do they need to qualify for credit. Investors receive all of the benefits traditionally associated with debt including return amplification and interest expense deductions.
Our goal is to offer properties both with leverage and without in order to satisfy a range of investment preferences. In this video from a previous webinar, Arrived CEO, Ryan Frazier and VP of investments, Cameron Wu explain the benefits of investing in a levered vs. an unlevered property on Arrived.