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Jeff Bezos is probably best known as the founder of Amazon.com Inc. (NASDAQ:AMZN), but the billionaire has several lesser-known business interests in various industries. Through his investment firm Bezos Expeditions, Bezos has made several early-stage investments in companies that have become industry leaders. Some of the more notable include: Airbnb Inc. (NASDAQ:ABNB), Uber Technologies Inc. (NYSE:UBER) and more recently Arrived.
Arrival has made a name for itself by subdividing single-family homes and selling shares to retail investors with a minimum investment of $100. Since launching its first property in 2021, the real estate investment platform has already financed nearly 400 properties and has over $156 million in assets under management. Bezos first invested in Arrivald during the company’s $37 million seed round in 2021 and then doubled that investment during the Series A round in 2022.
New real estate debt fund
The company has just expanded its offering to include this Private credit fundand offers its investors access to a pool of short-term real estate loans made to other investors and home builders. In contrast to a typical residential mortgage, these loans have terms of between six and 36 months and are used to finance real estate projects such as renovations, renovations or new buildings. The fund targets individual loans between $100,000 and $500,000, but is also exploring loan options up to $5 million.
The fund generates cash returns by collecting interest payments on the loans and distributing them to investors. The Private Credit Fund targets an annual return of 7% to 9% with monthly dividend distributions. The short-term nature of the loans also allows for more flexible liquidity options than many other credit funds. After six months, investors can request the redemption of all or part of their shares.
View fund details >>
Announcing the Private Credit Fund, Arrival co-founder and CEO Ryan Frazier said: “We launched this new product based on direct feedback from our investor community and are confident that now is the right time to bring it to investors “A number of debt investment opportunities have emerged, allowing us to achieve high risk-adjusted returns.”
Growing interest in personal loans
The launch of Arrivald’s new fund comes at a time when the private lending market is experiencing significant growth, particularly in the real estate sector. The current high interest rate environment and stock market uncertainties have made this asset class more attractive to investors seeking high returns and low correlation to the stock market. The number of options has also increased as banks have tightened their lending requirements.
The current 30-year fixed-rate mortgage is 7.04%, and typical bridge loans range from 9.5% to 12%. Considering that long-term government bonds have a yield of around 4.5%, home equity loans offer a compelling risk-adjusted return.
Interested investors can visit the website here to see more details about the new Private Credit Fund and invest from as little as $100.
This article Jeff Bezos is quietly getting into the residential mortgage business, making high-interest loans to other investors. It originally appeared on Benzinga.com