PART II AND III 2 arrived3-1apos22.htm PART II AND PART III

Post-Qualification Amendment No. 22

File No. 024-12135

EXPLANATORY NOTE

 

This is a post qualification amendment to an offering statement on Form 1-A originally filed by Arrived Homes 3, LLC (the “Company”) on January 23, 2023, and originally qualified by the U.S. Securities and Exchange Commission on February 21, 2023. The purpose of this post-qualification amendment is to add to the offering circular contained within the offering statement the offering of additional series of the Company.
 
An offering statement pursuant to Regulation A relating to these securities has been filed with the Securities and Exchange Commission (the “Commission”). Information contained in this preliminary offering circular is subject to completion or amendment. These securities may not be sold nor may offers to buy be accepted before the offering statement filed with the Commission is qualified. This preliminary offering circular shall not constitute an offer to sell or the solicitation of an offer to buy nor may there be any sales of these securities in any state in which such offer, solicitation or sale would be unlawful before registration or qualification under the laws of any such state. We may elect to satisfy our obligation to deliver a final offering circular by sending you a notice within two business days after the completion of our sale to you that contains the URL where the final offering circular or the offering statement in which such final offering circular was filed may be obtained.
 

PRELIMINARY OFFERING CIRCULAR

 

SUBJECT TO COMPLETION; DATED DECEMBER 4, 2024

 

 

 

Arrived Homes 3, LLC 

 

1700 Westlake Ave North, Suite 200

Seattle, WA 98109

(814) 277-4833

www.arrived.com

 

Best Efforts Offering of Series Membership Interests

 

Arrived Homes 3, LLC, which we refer to as “we,” “us,” “our,” “Arrived” or “our company,” is a Delaware series limited liability company that has been formed to permit public investment in individual real estate properties that will be owned by individual series of our company. Each individual series will hold the specific property that it acquires in a wholly-owned subsidiary, which will be a limited liability company organized under laws of the state in which the series property is located. We are offering on a best efforts, no offering minimum basis, the membership interests of each of the series of our company with a status of “Open” as set forth in the “Series Offering Table. The sale of membership interests is being facilitated by a broker-dealer registered under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and a member of FINRA which is registered in each state where the offer or sales of the interests will occur.

 

1

All of the series of our company being offered may collectively be referred to in this offering circular as the “series” and each, individually, as a “series.”  The interests of all series may collectively be referred to in this offering circular as the “interests” and each, individually, as an “interest” and the offerings of the interests may collectively be referred to in this offering circular as the “offerings” and each, individually, as an “offering.” See “Description of the Securities Being Offered” for additional information regarding the interests. The per interest purchase price of the series interests being offered hereunder is set forth in the Series Offering Table.

 

Our series offerings are conducted as a continuous offering pursuant to Rule 251(d)(3) of Regulation A, meaning that while the offering of a particular series is continuous, active sales of series interests may happen sporadically over the term of the offering. The term of each series offering will commence within two calendar days after the qualification date of the offering statement of which this offering circular is a part and end no later than the second anniversary of the qualification date of the offering statement.

 

There will be a separate closing, or closings, with respect to each series offering. An initial closing of a series offering will take place on the earliest to occur of (i) the date subscriptions for the maximum number of series interests have been accepted, (ii) a date determined by the manager in its sole discretion and (iii) the date that is one week prior to three months after the date that a particular series offering begins. Additionally, any subsequent series closing following such initial closing will take place on the earliest to occur of (i) the date subscriptions for the maximum number of series interests have been accepted, (ii) a date determined by the manager in its sole discretion and (iii) the date that is three months after the prior closing for the relevant series offering. A fully executed subscription agreement for any particular investor in a series offering will be accepted or rejected by the manager within 15 days of being received by the series.

 

If an initial closing has not occurred, a series offering will be terminated upon the earliest to occur of (i) the date immediately following the date one week prior to three months after the date the series offering begins and (ii) any date on which the manager elects to terminate the offering for a particular series in its sole discretion.  No securities are being offered by existing security-holders.

 

Each offering is being conducted on a “best efforts” basis pursuant to Regulation A of Section 3(b) of the Securities Act of 1933, as amended (the “Securities Act”), for Tier 2 offerings. The company is not offering, and does not anticipate selling, interests in any of the offerings in any state where the broker-dealer is not registered as such. 

 

No escrow agent has been engaged for this offering. Subscription funds owed by investors are paid from a mobile wallet (the "Arrived Homes Wallet") into which potential investors can deposit funds before or at the time of subscribing for an offering. See “Plan of Distribution and Subscription Procedure” and “Description of the Securities Being Offered” for additional information.
 

 There is currently no public trading market for any of our series interests, and an active market for these interests may not develop or be sustained.

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Series Membership Interests Overview 

 

Series Price to Public  Underwriter Discounts and Commissions (1)(2)  Proceeds to Issuer 
Arrived Series Adams         
Per Interest$10.00 $0.10 $9.90 
Total Minimum  N/A    N/A    N/A  
Total Maximum$361,220.00 $3,612.20 $357,607.80 
Arrived Series Bayne         
Per Interest$10.00 $0.10 $9.90 
Total Minimum  N/A    N/A    N/A  
Total Maximum$411,100.00 $4,111.00 $406,989.00 
Arrived Series Boxwood         
Per Interest$10.00 $0.10 $9.90 
Total Minimum  N/A    N/A    N/A  
Total Maximum$381,810.00 $3,818.10 $377,991.90 
Arrived Series Langley         
Per Interest$10.00 $0.10 $9.90 
Total Minimum  N/A    N/A    N/A  
Total Maximum$392,240.00 $3,922.40 $388,317.60 
Arrived Series Metallo         
Per Interest$10.00 $0.10 $9.90 
Total Minimum  N/A    N/A    N/A  
Total Maximum$349,080.00 $3,490.80 $345,589.20 
Arrived Series Misty         
Per Interest$10.00 $0.10 $9.90 
Total Minimum  N/A    N/A    N/A  
Total Maximum$408,140.00 $4,081.40 $404,058.60 
Arrived Series Presidio         
Per Interest$10.00 $0.10 $9.90 
Total Minimum  N/A    N/A    N/A  
Total Maximum$287,060.00 $2,870.60 $284,189.40 
Arrived Series Spangler         
Per Interest$10.00 $0.10 $9.90 
Total Minimum  N/A    N/A    N/A  
Total Maximum$454,410.00 $4,544.10 $449,865.90 
Arrived Series Tomlinson         
Per Interest$10.00 $0.10 $9.90 
Total Minimum  N/A    N/A    N/A  
Total Maximum$292,990.00 $2,929.90 $290,060.10 

 

(1) Dalmore Group, LLC (“Dalmore”) will be acting as our broker-dealer of record in connection with each offering and will be entitled to a brokerage fee equal to 1.0% of the amount raised through each offering. Notwithstanding the foregoing, Dalmore will not receive any fee on funds raised from the sale of any interests to the manager, its affiliates or the sellers of any of the properties. The broker-dealer of record’s role and compensation are described in greater detail under “Plan of Distribution and Subscription Procedure.”

 

(2) Because these are best efforts offerings, the actual public offering amounts, brokerage fees and proceeds to us are not presently determinable and may be substantially less than each total maximum offering amount set forth above. We will reimburse the manager for series offering expenses actually incurred in an amount up to 2% of gross offering proceeds.
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This offering circular contains forward-looking statements which are based on current expectations and beliefs concerning future developments that are difficult to predict. Neither the company nor the manager can guarantee future performance, or that future developments affecting the company, the manager or the platform will be as currently anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. Please see “Risk Factors” and “Cautionary Statement Regarding Forward-Looking Statements” for additional information. The interests offered hereby are highly speculative in nature and involve a high degree of risk.  See the “Risk Factors” section of this offering circular for a discussion of other material risks of investing in our interests.

 

Generally, no sale may be made to you in any offering if the aggregate purchase price you pay is more than 10% of the greater of your annual income or your net worth. Different rules apply to accredited investors and non-natural persons. Before making any representation that your investment does not exceed applicable thresholds, we encourage you to review Rule 251(d)(2)(i)(C) of Regulation A. For general information on investing, we encourage you to refer to www.investor.gov.

 

THE U.S. SECURITIES AND EXCHANGE COMMISSION DOES NOT PASS UPON THE MERITS OF OR GIVE ITS APPROVAL TO ANY SECURITIES OFFERED OR THE TERMS OF ANY OFFERING, NOR DOES IT PASS UPON THE ACCURACY OR COMPLETENESS OF ANY OFFERING CIRCULAR OR OTHER SOLICITATION MATERIALS. THESE SECURITIES ARE OFFERED PURSUANT TO AN EXEMPTION FROM REGISTRATION WITH THE COMMISSION; HOWEVER, THE COMMISSION HAS NOT MADE AN INDEPENDENT DETERMINATION THAT THE SECURITIES OFFERED ARE EXEMPT FROM REGISTRATION.

 

This offering circular is following the offering circular format described in Part II (a)(1)(i) of Form 1-A.

 

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 TABLE OF CONTENTS

STATE LAW EXEMPTION AND PURCHASE RESTRICTIONSii
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTSiii
MARKET AND OTHER INDUSTRY DATAiii
SERIES OFFERING TABLEiv
INCORPORATION OF CERTAIN INFORMATION BY REFERENCExvii
SUMMARY1
OFFERING SUMMARY9
RISK FACTORS12
DILUTION42
DESCRIPTION OF BUSINESS43
THE SERIES PROPERTIES BEING OFFERED57
USE OF PROCEEDS TO ISSUER75
MANAGEMENT93
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS103
SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN SECURITYHOLDERS103
INTEREST OF MANAGEMENT AND OTHERS IN CERTAIN TRANSACTIONS104
DESCRIPTION OF THE SECURITIES BEING OFFERED104
U.S. FEDERAL INCOME TAX CONSIDERATIONS113
ERISA CONSIDERATIONS133
PLAN OF DISTRIBUTION AND SUBSCRIPTION PROCEDURE134
LEGAL MATTERS141
ACCOUNTING MATTERS141
WHERE TO FIND ADDITIONAL INFORMATION141
INDEX TO FINANCIAL STATEMENTSF-1

 

i

 

STATE LAW EXEMPTION AND PURCHASE RESTRICTIONS

 

Our interests are being offered and sold only to “qualified purchasers” (as defined in Regulation A under the Securities Act). As a Tier 2 offering pursuant to Regulation A under the Securities Act, this offering will be exempt from state law “Blue Sky” registration requirements, subject to meeting certain state filing requirements and complying with certain anti-fraud provisions, to the extent that our interests offered hereby are offered and sold only to “qualified purchasers” or at a time when our interests are listed on a national securities exchange. “Qualified purchasers” include: (i) “accredited investors” under Rule 501(a) of Regulation D and (ii) all other investors so long as their investment in our interests does not represent more than 10% of the greater of their annual income or net worth (for natural persons), or 10% of the greater of annual revenue or net assets at fiscal year-end (for non-natural persons). Accordingly, we reserve the right to reject any investor’s subscription in whole or in part for any reason, including if we determine in our sole and absolute discretion that such investor is not a “qualified purchaser” for purposes of Regulation A.

 

For purposes of determining whether a potential investor is a “qualified purchaser,” annual income and net worth should be calculated as provided in the “accredited investor” definition under Rule 501 of Regulation D. In particular, net worth in all cases should be calculated excluding the value of an investor’s home, home furnishings and automobiles.

 

ii

 

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

 

The information contained in this offering circular includes some statements that are not historical and that are considered “forward-looking statements.”  Such forward-looking statements include, but are not limited to, statements regarding our development plans for our business; our strategies and business outlook; anticipated development of our company, the manager, each series of our company and the Arrived platform (defined below); and various other matters (including contingent liabilities and obligations and changes in accounting policies, standards and interpretations).  These forward-looking statements express the manager’s expectations, hopes, beliefs, and intentions regarding the future.  In addition, without limiting the foregoing, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements.  The words “anticipates,” “believes,” “continue,” “could,” “estimates,” “expects,” “intends,” “may,” “might,” “plans,” “possible,” “potential,” “predicts,” “projects,” “seeks,” “should,” “will,” “would” and similar expressions and variations, or comparable terminology, or the negatives of any of the foregoing, may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking.

 

The forward-looking statements contained in this offering circular are based on current expectations and beliefs concerning future developments that are difficult to predict.  Neither our company nor the manager can guarantee future performance, or that future developments affecting our company, the manager or the Arrived platform will be as currently anticipated.  These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements.

 

All forward-looking statements attributable to us are expressly qualified in their entirety by these risks and uncertainties.  These risks and uncertainties, along with others, are also described below under the headings “Summary – Summary Risk Factors” and “Risk Factors.” Should one or more of these risks or uncertainties materialize, or should any of the parties’ assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements.  You should not place undue reliance on any forward-looking statements and should not make an investment decision based solely on these forward-looking statements.  We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.

 

 

MARKET AND OTHER INDUSTRY DATA

 

This offering circular includes market and other industry data and estimates that are based on our management’s knowledge and experience in the markets in which we operate. The sources of such data generally state that the information they provide has been obtained from sources they believe to be reliable, but we have not investigated or verified the accuracy and completeness of such information. Our own estimates are based on information obtained from our and our affiliates’ experience in the markets in which we operate and from other contacts in these markets. We are responsible for all of the disclosure in this offering circular, and we believe our estimates to be accurate as of the date of this offering circular or such other date stated in this offering circular. However, this information may prove to be inaccurate because of the method by which we obtained some of the data for the estimates or because this information cannot always be verified with complete certainty due to the limits on the availability and reliability of raw data, the voluntary nature of the data gathering process and other limitations and uncertainties. As a result, you should be aware that market and other industry data included in this offering circular, and estimates and beliefs based on that data, may not be reliable.

 

iii

 

SERIES OFFERING TABLE

 

The table below shows key information related to the offering of each series.

 

Series NameSeries PropertyOffering Price per InterestMaximum Offering SizeMaximum Membership InterestsOpening DateClosing DateOffering StatusAcquisition Status from Third PartyAcquisition Status from Related Party Lease Status
Arrived Series ChilhoweeSingle family home located at 8615 Satellite Lane, Knoxville, TN 37920$10.00 $376,630.00  37,663 2/21/20233/27/23ClosedClosed as of 12/28/2022(1)Closed as of 1/21/2023(2)Vacant
Arrived Series SheezySingle family home located at 2901 Dodson Avenue, Chattanooga, TN 37406$10.00 $272,950.00  27,295 2/21/20233/23/23ClosedClosed as of 12/21/2022(1)Closed as of 1/21/2023(2)Leased as of 2/01/2023
Arrived Series BowlingSingle family home located at 1629 North Street SE, Decatur, AL 35601$10.00 $243,590.00  24,359 3/1/20233/23/23ClosedClosed as of 2/14/2023N/ALeased as of 3/10/2023
Arrived Series CadenSingle family home located at 2044 Laurel Lake Drive, Tuscaloosa, AL 35405$10.00 $294,190.00  29,419 3/1/20233/23/23ClosedClosed as of 2/21/2023N/ALeased as of 11/11/2024
Arrived Series CristalinoSingle family home located at 10227 Cristalino Road SW, Albuquerque, NM 87121$10.00 $362,930.00  36,293 3/1/20234/10/23ClosedClosed as of 2/13/2023N/ALeased as of 2/21/2024
Arrived Series EmelinaSingle family home located at 4967 Easton Drive, Tuscaloosa, AL 35405$10.00 $291,070.00  29,107 3/1/20233/23/23ClosedClosed as of 2/08/2023N/ALeased as of 3/28/2023
Arrived Series HavenSingle family home located at 5523 Torri Park Drive, Cottondale, AL 35453$10.00 $217,590.00  21,759 3/1/20233/23/23ClosedClosed as of 2/21/2023N/ALeased as of 7/29/2024
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Arrived Series HermanosSingle family home located at 9308 Cinder Place NW, Albuquerque, NM 87120$10.00 $363,960.00  36,396 3/1/20233/23/23ClosedClosed as of 1/31/2023N/ALeased as of 8/21/2024
Arrived Series AspenSingle family home located at 105 Aspen Forest Drive, Covington, GA 30016$10.00 $314,930.00  31,493 3/20/20234/12/23ClosedClosed as of 3/16/2023N/ALeased as of 3/04/2024
Arrived Series BennettSingle family home located at 19 Bennett Street, Newnan, GA 30263$10.00 $251,080.00  25,108 3/20/20234/17/23ClosedClosed as of 3/16/2023N/ALeased as of 7/05/2023
Arrived Series BrookwoodSingle family home located at 1801 Blossom Lane, Austell, GA 30168$10.00 $329,010.00  32,901 3/20/20234/14/23ClosedClosed as of 3/09/2023N/ALeased as of 8/15/2023
Arrived Series CamelliaSingle family home located at 124 Shadow Court SW, Huntsville, AL 35824$10.00 $308,290.00  30,829 3/20/20234/14/23ClosedClosed as of 2/14/2023N/ALeased as of 4/19/2023
Arrived Series HaverhillSingle family home located at 431 Haverhill Lane, Jonesboro, GA 30236$10.00 $277,160.00  27,716 3/20/20234/17/23ClosedClosed as of 3/16/2023N/ALeased as of 7/14/2023
Arrived Series LithoniaSingle family home located at 1769 Cutters Mill Way, Lithonia, GA 30058$10.00 $332,030.00  33,203 3/20/20234/17/23ClosedClosed as of 3/16/2023N/ALeased as of 4/05/2024
Arrived Series PalmoreSingle family home located at 1700 Crabtree Circle, Tuscaloosa, AL 35405$10.00 $241,730.00  24,173 3/20/20234/26/23ClosedClosed as of 2/23/2023N/ALeased as of 4/27/2023
v

Arrived Series ThomasSingle family home located at 56 Boone Drive, Newnan, GA 30263$10.00 $259,830.00  25,983 3/20/20234/10/23ClosedClosed as of 3/16/2023N/ALeased as of 5/18/2023
Arrived Series WoodwindSingle family home located at 224 Woodwind Drive, Rockmart, GA 30153$10.00 $300,070.00  30,007 3/20/20234/17/23ClosedClosed as of 3/09/2023N/ALeased as of 6/01/2023
Arrived Series BennySingle family home located at 1319 N Umbrella Ave, Broken Arrow, OK 74012$10.00 $305,970.00  30,597 3/30/20234/19/23ClosedClosed as of 3/21/2023N/ALeased as of 10/13/2023
Arrived Series MontgomerySingle family home located at 424 Tree Line Drive, Montgomery, AL 36117$10.00 $247,640.00  24,764 3/30/20234/26/23ClosedClosed as of 3/22/2023N/ALeased as of 3/26/2024
Arrived Series PortsmouthSingle family home located at 781 C Avenue, Norfolk, VA 23504$10.00 $258,620.00  25,862 3/30/20234/19/23ClosedClosed as of 3/15/2023N/ALeased as of 5/17/2023
Arrived Series SummerglenSingle family home located at 29433 E 79th Place S, Broken Arrow, OK 74014$10.00 $286,880.00  28,688 3/30/20234/19/23ClosedClosed as of 3/29/2023N/ALeased as of 6/06/2023
Arrived Series WesthavenSingle family home located at 824 Kilby Avenue, Suffolk, VA 23434$10.00 $304,320.00  30,432 3/30/20234/26/23ClosedClosed as of 3/31/2023N/AVacant
Arrived Series CorderoSingle family home located at 1028 Alexandra St SW, Albuquerque, NM 87121$10.00 $331,750.00  33,175 4/12/20235/8/23ClosedClosed as of 4/18/2023N/ALeased as of 6/06/2023
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Arrived Series EthanSingle family home located at 440 Tree Line Drive, Montgomery, AL 36117$10.00 $233,850.00  23,385 4/12/20239/22/23ClosedClosed as of 4/27/2023N/ALeased as of 6/26/2023
Arrived Series HamblenSingle family home located at 227 Belle Court, Talbot, TN 37877$10.00 $306,950.00  30,695 4/12/20235/8/23ClosedClosed as of 3/30/2023N/ALeased as of 4/28/2023
Arrived Series HolmesSingle family home located at 900 West 23rd Street, North Little Rock, AR 72114$10.00 $213,020.00  21,302 4/12/20235/8/23ClosedClosed as of 3/29/2023N/ALeased as of 5/01/2023
Arrived Series WatsonSingle family home located at 904 West 23rd Street, North Little Rock, AR 72114$10.00 $213,020.00  21,302 4/12/20235/8/23ClosedClosed as of 3/29/2023N/ALeased as of 7/07/2023
Arrived Series WheelerSingle family home located at 1627 N Street SE, Decatur, AL 35601$10.00 $250,870.00  25,087 4/12/20235/8/23ClosedClosed as of 3/31/2023N/ALeased as of 5/18/2023
Arrived Series BryantSingle family home located at 148 Gambrell Road, Hinesville, GA 31313$10.00 $330,560.00  33,056 4/12/20235/4/23ClosedClosed as of 4/20/2023N/ALeased as of 7/27/2023
Arrived Series ClaremoreSingle family home located at 1011 W Cheyenne Lane, Claremore, OK 74019$10.00 $278,440.00  27,844 4/12/20235/16/23ClosedClosed as of 4/27/2023N/AVacant
Arrived Series HaikeySingle family home located at 14910 E 39th Street S, Tulsa, OK 74134$10.00 $289,960.00  28,996 4/12/20235/4/23ClosedClosed as of 5/17/2023N/ALeased as of 6/30/2023
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Arrived Series HancockSingle family home located at 1715 Ethan Way, Hephzibah, GA 30815$10.00 $321,530.00  32,153 4/12/20234/28/23ClosedClosed as of 4/27/2023N/ALeased as of 9/19/2023
Arrived Series HelmerichSingle family home located at 11621 S 277th E Avenue, Coweta, OK 74429$10.00 $300,920.00  30,092 4/12/20235/4/23ClosedClosed as of 4/19/2023N/ALeased as of 6/19/2023
Arrived Series WyndeSingle family home located at 29946 Glenrose Way, Harvest, AL 35749$10.00 $298,660.00  29,866 4/12/20235/4/23ClosedClosed as of 4/26/2023N/ALeased as of 7/14/2023
Arrived Series ArkomaSingle family home located at 8008 Dogwood Drive, Fort Smith, AR 72916$10.00 $283,490.00  28,349 9/21/202310/13/23ClosedClosed as of 4/18/2023N/ALeased as of 5/26/2023
Arrived Series GordonSingle family home located at 545 Post Oak Lane, Augusta, GA 30909$10.00 $304,530.00  30,453 9/21/202310/18/23ClosedClosed as of 4/11/2023N/ALeased as of 9/05/2023
Arrived Series LucasSingle family home located at 623 Amhearst Row, Hinesville, GA 31313$10.00 $302,290.00  30,229 9/21/202310/18/23ClosedClosed as of 4/20/2023N/ALeased as of 6/13/2023
Arrived Series MacomberSingle family home located at 1012 Sweetbay Court, Hinesville, GA 31313$10.00 $327,150.00  32,715 9/21/202310/18/23ClosedClosed as of 5/02/2023N/ALeased as of 6/21/2024
Arrived Series MeridianSingle family home located at 214 Bermuda Lakes Drive, Meridianville, AL 35759$10.00 $315,510.00  31,551 9/21/202310/19/23ClosedClosed as of 4/21/2023N/ALeased as of 10/01/2024
viii

Arrived Series PerditaSingle family home located at 3417 Durham Lane, Charlotte, NC 28269$10.00 $392,180.00  39,218 9/21/202310/18/23ClosedClosed as of 4/27/2023N/ALeased as of 9/18/2023
Arrived Series PongoSingle family home located at 3413 Durham Lane, Charlotte, NC 28269$10.00 $392,180.00  39,218 9/21/202310/18/23ClosedClosed as of 4/27/2023N/ALeased as of 8/25/2023
Arrived Series WoodlandSingle family home located at 3560 21st Street, Tuscaloosa, AL 35401$10.00 $195,290.00  19,529 9/21/202310/18/23ClosedClosed as of 4/19/2023N/ALeased as of 6/30/2023
Arrived Series AntaresSingle family home located at 67 Cavalry Court, Rossville, GA 30741$10.00 $366,170.00  36,617 9/28/202311/16/2023ClosedClosed as of 5/05/2023N/ALeased as of 10/20/2023
Arrived Series AramisSingle family home located at 120 Greyson Street, Augusta, GA 30909$10.00 $352,820.00  35,282 9/28/202310/19/23ClosedClosed as of 5/04/2023N/ALeased as of 12/15/2023
Arrived Series AthosSingle family home located at 12 Anzio Avenue, Hinesville, GA 31313$10.00 $343,570.00  34,357 9/28/202310/19/23ClosedClosed as of 5/09/2023N/ALeased as of 9/01/2023
Arrived Series BarclaySingle family home located at 646 S. Hoskins Road, Charlotte, NC 28208$10.00 $363,810.00  36,381 9/28/202310/19/23ClosedClosed as of 4/26/2023N/ALeased as of 6/01/2023
Arrived Series BeanSingle family home located at 487 Cox Hollow Road, Kingsport, TN 37663$10.00 $341,610.00  34,161 9/28/202310/25/23ClosedClosed as of 9/13/2023N/ALeased as of 12/15/2023
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Arrived Series BluebellSingle family home located at 3518 Alpha Court, Erlanger, KY 41018$10.00 $355,170.00  35,517 9/28/202310/25/23ClosedClosed as of 5/04/2023N/ALeased as of 7/21/2023
Arrived Series BradfordSingle family home located at 4509 Wildwood Avenue, Charlotte, NC 28208$10.00 $361,540.00  36,154 9/28/202310/25/23ClosedClosed as of 4/25/2023N/ALeased as of 9/12/2023
Arrived Series CaterpillarSingle family home located at 2880 Alpin Drive, Jacksonville, FL 32218$10.00 $357,780.00  35,778 9/28/202310/25/23ClosedClosed as of 5/02/2023N/ALeased as of 10/23/2023
Arrived Series EllieSingle family home located at 346 Everleigh Circle, Talbott, TN 37877$10.00 $334,740.00  33,474 9/28/202310/25/23ClosedClosed as of 9/13/2023N/ATemporarily Out of Service
Arrived Series LibertySingle family home located at 1801 White Cedar Way, Hinesville, GA 31313$10.00 $298,360.00  29,836 9/28/202310/19/23ClosedClosed as of 4/25/2023N/ALeased as of 5/22/2024
Arrived Series MallardSingle family home located at 1612 College Street SE, Decatur, AL 35601$10.00 $251,090.00  25,109 9/28/202310/13/23ClosedClosed as of 4/28/2023N/ALeased as of 5/30/2023
Arrived Series RiverwoodSingle family home located at 400 Louise Way, Locust Grove, GA 30248$10.00 $351,620.00  35,162 9/28/202310/24/23ClosedClosed as of 4/26/2023N/ALeased as of 9/14/2023
Arrived Series RoanokeSingle family home located at 2913 Roanoke Avenue, Newport News, VA 23607$10.00 $397,050.00  39,705 9/28/202310/19/23ClosedClosed as of 5/11/2023N/ALeased as of 7/25/2023
x

Arrived Series SherwoodSingle family home located at 724 W 23rd Street, North Little Rock, AR 72114$10.00 $214,510.00  21,451 9/28/202310/25/23ClosedClosed as of 4/25/2023N/ALeased as of 11/10/2023
Arrived Series TanselSingle family home located at 107 Danielle Loop, Rincon, GA 31326$10.00 $384,810.00  38,481 9/28/202310/27/23ClosedClosed as of 4/26/2023N/ALeased as of 10/13/2023
Arrived Series TytusSingle family home located at 3310 Tytus Avenue, Middletown, OH 45042$10.00 $307,580.00  30,758 9/28/202310/19/23ClosedClosed as of 4/27/2023N/ALeased as of 8/15/2023
Arrived Series WilliamsonSingle family home located at 1803 1/2 N 28th Street, Richmond, VA 23223$10.00 $336,030.00  33,603 9/28/202310/18/23ClosedClosed as of 5/08/2023N/ALeased as of 7/19/2023
Arrived Series ZaneSingle family home located at 6253 Burbank Crossing Loop, Montgomery, AL 36117$10.00 $200,960.00  20,096 9/28/202311/1/23ClosedClosed as of 5/05/2023N/ALeased as of 7/07/2023
Arrived Series AryaSingle family home located at 814 W 21st Street, North Little Rock, AR 72115$10.00 $219,950.00  21,995 10/25/202311/16/2023ClosedClosed as of 10/18/2023N/ALeased as of 12/18/2023
Arrived Series MarcySingle family home located at 823 W 20th Street, North Little Rock, AR 72114$10.00 $219,950.00  21,995 10/25/202311/16/2023ClosedClosed as of 10/18/2023N/ALeased as of 1/11/2024
Arrived Series SansaSingle family home located at 812 W 21st Street, North Little Rock, AR 72114$10.00 $219,950.00  21,995 10/25/202311/16/2023ClosedClosed as of 10/18/2023N/ALeased as of 11/08/2023
xi

Arrived Series HaybridgeSingle family home located at 3715 Oakwood Road, Charlotte, NC 28269$10.00 $422,410.00  42,241 11/14/202312/1/2023ClosedClosed as of 10/18/2023N/ALeased as of 2/22/2024
Arrived Series HedgecrestSingle family home located at 3719 Oakwood Road, Charlotte, NC 28269$10.00 $422,410.00  42,241 11/14/202312/1/2023ClosedClosed as of 10/18/2023N/ALeased as of 3/22/2024
Arrived Series LaylaSingle family home located at 313 Aspen Drive, Jefferson City, TN 37750$10.00 $383,040.00  38,304 11/14/202311/30/2023ClosedClosed as of 11/15/2023N/ALeased as of 1/30/2024
Arrived Series LolaSingle family home located at 336 Aspen Drive, Jefferson City, TN 37750$10.00 $356,300.00  35,630 11/14/202311/30/2023ClosedClosed as of 11/15/2023N/ALeased as of 12/18/2023
Arrived Series RatliffSingle family home located at 1117 Amber Vista Lane, Knoxville, TN 37914$10.00 $376,790.00  37,679 11/14/202311/30/2023ClosedClosed as of 10/25/2023N/ALeased as of 5/01/2024
Arrived Series CollinisonSingle family home located at 5048 Cottonseed Way, Morristown, TN 37814$10.00 $356,170.00  35,617 11/20/202312/21/2023ClosedClosed as of 11/15/2023N/AVacant
Arrived Series HardmanSingle family home located at 1702 Oak Street, Chattanooga, TN 37404$10.00 $447,350.00  44,735 11/20/202312/21/2023ClosedClosed as of 11/02/2023N/ALeased as of 11/30/2023
xii

Arrived Series KeystoneSingle family home located at 1675 Pebblestone Court, Morristown, TN 37814$10.00 $402,970.00  40,297 11/20/202312/13/2023ClosedClosed as of 12/06/2023N/ALeased as of 1/31/2024
Arrived Series NorthbrookSingle family home located at 7325 Longmeadow Drive, Horn Lake, MS 38637$10.00 $333,670.00  33,367 11/20/202312/11/2023ClosedClosed as of 11/20/2023N/ALeased as of 4/01/2024
Arrived Series PebblestoneSingle family home located at 1641 Pebblestone Court, Morristown, TN 37814$10.00 $391,220.00  39,122 11/20/202312/11/2023ClosedClosed as of 12/06/2023N/ALeased as of 2/16/2024
Arrived Series FrancesSingle family home located at 8967 Mary Frances Drive, Southaven, MS 38671$10.00 $329,140.00  32,914 12/14/20232/21/2024ClosedClosed as of 12/06/2023N/ALeased as of 1/17/2024
Arrived Series NorthridgeSingle family home located at 441 Deluth Drive, Bowling Green, KY 42101$10.00 $319,550.00  31,955 12/14/20231/12/2024ClosedClosed as of 12/13/2023N/ALeased as of 4/22/2024
Arrived Series RachelSingle family home located at 186 Lindsell Road, Athens, TN 37303$10.00 $342,120.00  34,212 12/14/20231/31/2024ClosedClosed as of 11/29/2023N/ALeased as of 3/16/2024
Arrived Series RossSingle family home located at 138 Lindsell Road, Athens, TN 37303$10.00 $394,110.00  39,411 12/14/20231/26/2024ClosedClosed as of 11/29/2023N/ALeased as of 1/05/2024
Arrived Series VanzantSingle family home located at 1016 Clayton Road, Cave Springs, AR 72718$10.00 $415,850.00  41,585 12/14/20231/26/2024ClosedClosed as of 12/06/2023N/ALeased as of 2/09/2024
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Arrived Series WyndhurstSingle family home located at 185 List Road, Huntsville, AL 35810$10.00 $367,460.00  36,746 12/14/20231/18/2024ClosedClosed as of 11/29/2023N/AVacant
Arrived Series GlenncrestSingle family home located at 15995 Glenncrest Lane NW, Harvest, AL 35749$10.00 $336,090.00  33,609 5/30/20246/20/2024ClosedClosed as of 11/15/2023N/ALeased as of 1/05/2024
Arrived Series LaurelSingle family home located at 1112 Ridge Parke, Kingsport, TN 37663$10.00 $394,120.00  39,412 5/30/20246/20/2024ClosedClosed as of 1/24/2024N/ALeased as of 2/07/2024
Arrived Series OaklandSingle family home located at 4310 Ohls Avenue, Chattanooga, TN 37410$10.00 $360,730.00  36,073 5/30/20247/11/2024ClosedClosed as of 10/25/2023N/ALeased as of 3/29/2024
Arrived Series PhoebeSingle family home located at 139 Lindsell Road, Athens, TN 37303$10.00 $326,910.00  32,691 5/30/20246/20/2024ClosedClosed as of 12/27/2023N/ALeased as of 3/16/2024
Arrived Series JohnsonSingle family home located at 1078 Clearwater Lane, Johnson City, TN 37601$10.00 $388,510.00  38,851 7/10/20249/26/2024ClosedClosed as of 6/26/2024N/ALeased as of 7/24/2024
Arrived Series SedgefieldSingle family home located at 4005 Tenderten Way, Greensboro, NC 27405$10.00 $360,800.00  36,080 7/10/20248/2/2024ClosedClosed as of 2/02/2024N/ALeased as of 3/22/2024
Arrived Series RobinsonSingle family home located at 2070 Hyacinth Lane, Hernando, MS 38632$10.00 $385,550.00  38,555 9/20/2024 OpenClosed as of 10/09/2024N/ALeased as of 11/06/2024
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Arrived Series SenecaSingle family home located at 7123 Train Station Way, Louisville, KY 40272$10.00 $351,970.00  35,197 9/20/202410/28/2024ClosedClosed as of 9/04/2024N/ALeased as of 10/31/2024
Arrived Series AdamsSingle family home located at 2302 Beacon Road, Talbott , TN 27877$10.00 $361,220.00   36,122  [*/*/2024] Not Yet QualifiedClosed as of 11/12/2024N/AVacant
Arrived Series BayneSingle family home located at 821 Magnolia Ridge Drive, Blountville, TN 37617$10.00$411,100.00  41,110 [*/*/2024] Not Yet QualifiedClosed as of 11/20/2024N/AVacant
Arrived Series BoxwoodSingle family home located at 2068 Tulip Drive, Hernando, MS 38632$10.00$381,810.00  38,181 [*/*/2024] Not Yet QualifiedClosed as of 11/20/2024N/AVacant
Arrived Series LangleySingle family home located at 731 30th Street, Newport News, VA 23607$10.00$392,240.00  39,224 [*/*/2024] Not Yet QualifiedClosed as of 11/06/2024N/AVacant
Arrived Series MetalloSingle family home located at 5318 Selah Street, Springdale, AR 72764$10.00$349,080.00  34,908 [*/*/2024] Not Yet QualifiedNot Yet ClosedN/ANot Yet Closed
Arrived Series MistySingle family home located at 5410 Misty Crossing Court, Florissant, MO 63034$10.00$408,140.00  40,814 [*/*/2024] Not Yet QualifiedClosed as of 11/13/2024N/AVacant
Arrived Series PresidioSingle family home located at 4047 Little Bighorn Drive, Indianapolis, IN 46235$10.00$287,060.00  28,706 [*/*/2024] Not Yet QualifiedClosed as of 11/13/2024N/AVacant
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Arrived Series SpanglerSingle family home located at 2807 Bentwood Drive, Independence, KY 41051$10.00$454,410.00  45,441 [*/*/2024] Not Yet QualifiedClosed as of 11/20/2024N/AVacant
Arrived Series TomlinsonSingle family home located at 955 Mossy Stone Court, Bowling Green, KY 42101$10.00$292,990.00  29,299 [*/*/2024] Not Yet QualifiedClosed as of 11/13/2024N/AVacant
Total $31,204,980.00 (3) 3,120,498 (4) 

 

xvi

(1) Represents the date on which the manager or an affiliate of the manager acquired the series property from a third-party seller in accordance with the acquisition method described under “Description of Business—Acquisition Mechanics—2. Acquisition of a Series Property from the Manager or an Affiliate of the Manager.”

 

(2) Represents the date on which the series acquired a 100% interest in the limited liability company that directly owns the related series property.

 

(3) Represents the proposed Maximum Offering Size for all Offerings that have been qualified, or are being qualified, pursuant to the offering statement of which this Offering Circular forms a part, as required for purposes of the Form 5110 submitted to FINRA.

 

(4) Represents the proposed Maximum Membership Interests for all Offerings that have been qualified, or are being qualified, pursuant to the offering statement of which this Offering Circular forms a part, as required for purposes of the Form 5110 submitted to FINRA. 
  
 

INCORPORATION OF CERTAIN INFORMATION BY REFERENCE

 

This Offering Circular is part of the Offering Statement on Form 1-A (File No. 024-12135) that was filed with the Commission. The financial statement information incorporated by reference herein can be accessed at https://arrived.com/circulars. We hereby incorporate by reference into this Offering Circular all of the information contained in the following filings by Arrived Homes 3, LLC with the Commission, to the extent not otherwise modified or replaced by a subsequent filing:
 

1.  The sections bulleted below of the Offering Statement filed with the Commission on January 23, 2023.

 

  The Series Properties Being Offered
  Use of Proceeds to Issuer
  Arrived Homes 3, LLC and its Series Financial Statements January 10, 2023
 
2.  The sections bulleted below of Post-Qualification Amendment No. 1.

 

  The Series Properties Being Offered
  Use of Proceeds to Issuer
 3.  The sections bulleted below of Post-Qualification Amendment No. 2.
 
  The Series Properties Being Offered
  Use of Proceeds to Issuer
4.  The sections bulleted below of Post-Qualification Amendment No. 3.
 
  The Series Properties Being Offered
  Use of Proceeds to Issuer
5.  The sections bulleted below of Post-Qualification Amendment No. 4.
 
xvii

  The Series Properties Being Offered
  Use of Proceeds to Issuer
6.  The sections bulleted below of Post-Qualification Amendment No. 5.
 
  The Series Properties Being Offered
  Use of Proceeds to Issuer
7.  The sections bulleted below of Post-Qualification Amendment No. 9.
 
  The Series Properties Being Offered
  Use of Proceeds to Issuer
8.  The sections bulleted below of Post-Qualification Amendment No. 10.
 
  The Series Properties Being Offered
  Use of Proceeds to Issuer

9.  The sections bulleted below of Post-Qualification Amendment No. 14.
 
  The Series Properties Being Offered
  Use of Proceeds to Issuer

10.  The sections bulleted below of Post-Qualification Amendment No. 15.
 
  The Series Properties Being Offered
  Use of Proceeds to Issuer

11.  The sections bulleted below of Post-Qualification Amendment No. 16.
 
  The Series Properties Being Offered
  Use of Proceeds to Issuer

12.  The sections bulleted below of Post-Qualification Amendment No. 17.

  The Series Properties Being Offered
  Use of Proceeds to Issuer

13.  The sections bulleted below of the Company’s Annual Report on Form 1-K for the Fiscal Year ended December 31, 2023.
 
  Management’s Discussion and Analysis of Financial Condition and Results of Operation
  Financial Statements and Accompanying Notes as of December 31, 2023 and for the period January 4, 2023 (date of inception) through December 31, 2023
 
14.  The sections bulleted below of Post-Qualification Amendment No. 19.
xviii

 
  The Series Properties Being Offered
  Use of Proceeds to Issuer

15.  The sections bulleted below of Post-Qualification Amendment No. 20.
 
  The Series Properties Being Offered
  Use of Proceeds to Issuer

16.  The sections bulleted below of Post-Qualification Amendment No. 21.
 
  The Series Properties Being Offered
  Use of Proceeds to Issuer

 
17.  The sections bulleted below of the Company’s Semiannual Report on Form 1-SA as of and for the Six Months ended June 30, 2024.
  Management’s Discussion and Analysis of Financial Condition and Results of Operation
  Financial Statements and Accompanying Notes as of and the for Six Months ended June 30, 2024 and 2023
 
Any statement contained in any document incorporated by reference into this Offering Circular will be deemed modified or superseded for the purposes of this Offering Circular to the extent that a statement contained in this Offering Circular modifies or supersedes that statement. Any statement so modified or superseded will not be deemed, except as so modified or superseded, to constitute a part of this Offering Circular. From time to time, we may file an additional Post-Qualification Amendment or provide an “Offering Circular Supplement” that may add, update or change information contained in this Offering Circular. Note that any statement we make in this Offering Circular will be modified or superseded by an inconsistent statement made by us in a subsequent Offering Circular Supplement or Post-Qualification Amendment.
 
To the extent any financial statements are herein incorporated by reference, we will provide (at no cost) an electronic copy of such financial statements to any holder of securities, including any beneficial owner, upon written or oral request to support@arrived.com or (814) 277-4833. Additionally, such financial statements can be found at https://arrived.com/circulars.
 
xix

  
SUMMARY
 
This summary highlights some of the information in this offering circular.  It does not contain all of the information that you should consider before investing in our interests.  You should read carefully the detailed information set forth under “Risk Factors” and the other information included in this offering circular.  Except where the context suggests otherwise, the terms “Arrived,” “our company,” “we,” “us” and “our” refer to Arrived Homes 3, LLC, a Delaware series limited liability company, together with its consolidated series and their wholly-owned subsidiaries; references in this offering circular to the “manager” refer to Arrived Holdings, Inc., a Delaware corporation and the managing member of our company, and each of its series and their subsidiaries. All references in this offering circular to “$” or “dollars” are to United States dollars.
  
Company Overview – Our Mission
  
Arrived Homes 3, LLC, a Delaware series limited liability company, was formed in January 2023 to permit public investment in specific single family rental homes. We believe people should have the freedom to move around to pursue new opportunities in their lives while still having access to the wealth creation that long-term home ownership and real estate investment can provide. To support this idea, we are building what we believe to be a new model for home ownership and real estate investment that doesn’t lock people into a single home or city. We believe in passive income, conservative debt, freedom to move, diversification, and aligned incentives.
  
Arrived is a marketplace for investing in homes. We buy single family homes, lease them, divide them into multiple interests, and offer them as investments on a per interest basis through our web-based platform. Investors can manage their risk by spreading their investments across a portfolio of homes, they can invest in real estate without needing to apply for mortgages or take on personal debt, and they can move to new homes or cities and continue holding their Arrived investments without having to worry about selling homes they’re invested in.
  
Arrived does all of the work of sourcing, analyzing, maintaining, and managing all of the homes that we acquire. We analyze every home investment across several financial, market, and demographic characteristics to support our acquisition decision-making. Every investment we make is an investment in the communities in which Arrived operates, alongside other like-minded individuals. As our community network grows, so does our access to investment and housing opportunities.
  
1

Arrived rents the homes we acquire to tenants who can also invest through the same process as any other member of the Arrived platform, becoming part owners of the homes they’re living in at that time. By investing together we align incentives towards creating value for everyone.
  
Our Series LLC Structure
  
Each single family rental home that we acquire will be owned by a separate series of our company that we will establish to acquire that home.  Each series may hold the specific property that it acquires directly or in a wholly-owned subsidiary, which would be a limited liability company organized under laws of the state in which the series property is located. 
  
As a Delaware series limited liability company, the debts, liabilities, obligations and expenses incurred, contracted for or otherwise existing with respect to a particular series are segregated and enforceable only against the assets of such series, as provided under Delaware law.  We intend for each series to elect and qualify to be taxed as a separate real estate investment trust, or REIT, for U.S. federal income tax purposes, commencing with the taxable year ending after the completion of the initial offering of interests of such series.
  
  
We are offering membership interests in each of the series of our company, which represent limited liability company interests in such series. All of the series of our company offered hereunder may collectively be referred to herein as the “series” and each, individually, as a “series.”  The interests of all series described above may collectively be referred to herein as the “interests,” or “our securities” and each, individually, as an “interest” and the offerings of the interests may collectively be referred to herein as the “offerings” and each, individually, as an “offering.”  See “Description of the Securities Being Offered” for additional information regarding the interests.
  
Our company’s core business is the identification, acquisition, marketing and management of individual single family homes for the benefit of our investors. Each series is intended to own a single property. These properties may be referred to herein, collectively, as the “properties” or each, individually, as a “property.”
  
The interests represent an investment solely in a particular series and, thus, indirectly in the property owned by that series. The interests do not represent an investment in our company or the manager.  We do not anticipate that any series will own anything other than the single property associated with such series.  We currently anticipate that the operations of our company, including the formation of additional series and the corresponding acquisition of additional properties, will benefit investors by allowing investors to build a diversified portfolio of investments. 
  
A purchaser of the interests may be referred to herein as an “investor” or “interest holder.”
  
Our series offerings are conducted as a continuous offering pursuant to Rule 251(d)(3) of Regulation A, meaning that while the offering of a particular series is continuous, active sales of series interests may take place sporadically over the term of the offering. The term of each series offering will commence within two calendar days after the qualification date of the offering statement of which this offering circular is a part and end no later than the second anniversary of the qualification date of the offering statement.
  
There will be a separate closing, or closings, with respect to each offering. An initial closing of an offering will take place on the earliest to occur of (i) the date subscriptions for the maximum number of series interests have been accepted, (ii) a date determined by the manager in its sole discretion and (iii) the date one week prior to three months after the offering begins. Additionally, any closing following such initial closing will take place on the earliest to occur of (i) the date subscriptions for the maximum number of series interests have been accepted, (ii) a date determined by the manager in its sole discretion and (iii) the date that is three months after the prior closing for the relevant series offering. A fully executed subscription agreement for any particular investor in a series offering will be accepted or rejected by the manager within 15 days of being received by the series.
  
2

If an initial closing has not occurred, an offering will be terminated upon the earliest to occur of (i) the date immediately following the date one week prior to three months after the date the offering begins and (ii) any date on which the manager elects to terminate the offering for a particular series in its sole discretion.  No securities are being offered by existing security-holders.
  
Each offering is being conducted under Tier 2 of Regulation A (17 CFR 230.251 et. seq.) and the information contained herein is being presented in offering circular format.  Our company is not offering, and does not anticipate selling, interests in any of the offerings in any state where Dalmore, its soliciting agent and executing broker, is not registered as a broker-dealer. No escrow agent has been engaged for this offering. Subscription funds owed by investors are paid from the Arrived Homes Wallet into which potential investors can deposit funds before or at the time of subscribing for an offering. See “Plan of Distribution and Subscription Procedure” and “Description of the Securities Being Offered” for additional information.
  
Investment Objectives
  
Our investment objectives are: 
  
 
Consistent cash flow;
  
 
Long-term capital appreciation with moderate leverage;
  
 
Favorable tax treatment of REIT income and long term capital gains; and
  
 
Capital preservation.
  
We cannot assure you that we will attain these objectives or that the value of our assets will not decrease. 
  
Securities Being Offered
  
Investors will acquire membership interests in a series of our company, each of which is intended to be a separate series of our company for purposes of accounting for assets and liabilities.  It is intended that owners of interests in a series will only have an interest in the assets, liabilities, profits and losses pertaining to the specific property owned by that series.  For example, an owner of interests in Arrived Series Robinson will only have an interest in the assets, liabilities, profits and losses pertaining to Arrived Series Robinson and its related operations.  See the “Description of the Securities Offered” section for further details. The minimum investment you can make for any series is one (1) interest in a series and the maximum investment is equal to 9.8% of the total interests being offered for such series, although such minimum and maximum thresholds may be waived by the manager in its sole discretion. See “⸺Restrictions on Ownership of our Interests” below.
   
The Manager
  
Our company is managed by Arrived Holdings, Inc., a Delaware corporation and managing member of our company, which we refer to herein as the “manager.” Pursuant to the terms of our company’s limited liability company operating agreement, which we refer to as the “operating agreement,” the manager will provide certain management and advisory services to our company and to each of its series and their subsidiaries, if any, as well as a management team and appropriate support personnel.  The manager is an asset management company that operates a web-based investment platform, which we refer to as the Arrived platform, used by our company for the offer and sale of interests in the series of our company.
  
The nature of our business to be conducted or promoted by us must at all times be to engage in any lawful act or activity for which LLCs may be organized under the Delaware Limited Liability Company Act.
 
Management Compensation
  
3

The manager will receive from a series a one-time sourcing fee equal to 3.5% of the purchase price of a series property paid out of the proceeds to issuer from the proceeds to issuer on the initial amount raised from investors. Additionally, the manager will receive from a series an annual asset management fee equal to six tenths of a percent (0.6%) of the purchase price of the series property for that series, paid out of the series’ net operating rental income on a quarterly basis. Additionally, pursuant to the operating agreement, the manager will receive reimbursements for out-of-pocket expenses in connection with our organization and offerings (up to a maximum of 2% of the gross offering proceeds per series offering), our operations and the acquisition of properties and in connection with third parties providing services to us. The manager may also receive a portion of the property management fee and the property disposition fee as described below. With respect to the operating accounts for each series that the manager maintains with a third-party bank, the manager will be entitled to receive any interest earned on the cash balances in such accounts. The manager reserves the right to waive any fees or reimbursements it is due in its sole discretion. The items of compensation are summarized in “Management—Management Compensation.”
  
Property Manager
  
The Company will appoint an affiliate of the manager or a third-party property management company to serve as property manager to manage the property of each series pursuant to a property management agreement.
  
The services provided by the property manager will include:
  
 
creating the asset maintenance policies for the collection of rents;  
  
 
investigating, selecting, and, on behalf of the applicable series, engaging and conducting business with such persons as the property manager deems necessary to ensure the proper performance of its obligations under the property management agreement, including, but not limited to, consultants, insurers, insurance agents, maintenance providers, bookkeepers and accountants and any and all persons acting in any other capacity deemed by the property manager necessary or desirable for the performance of any of the services under the property management agreement; and 
  
 
developing standards for the care of the underlying properties.  
  
See “Description of Business—Description of the Property Management Agreement.”
  
Property Management Fee
 
The company will appoint an affiliate of the manager or a third-party property management company to serve as property manager to manage the property of each series pursuant to a property management agreement. The fee arrangements for each third-party property management company are set forth below:
 
Marketplace Homes
 
As compensation for the services provided by the property manager, each series will be charged a property management fee of $70 on a monthly basis and paid to the property manager pursuant to the property management agreement.
 
Mynd
 
As compensation for the services provided by the property manager, each series will be charged a property management fee equal to six percent (6%) of all rents and fees as remitted to the series or a minimum property management fee of $84 on a monthly basis and paid to the property manager pursuant to the property management agreement.
 
Streetlane (formerly Great Jones)
4

 
As compensation for the services provided by the property manager, each series will be charged a property management fee equal to eight percent (8%) of all rents and fees as remitted to the series or a minimum property management fee of $99 on a monthly basis and paid to the property manager pursuant to the property management agreement. As of October 2023, all properties formerly managed by Great Jones are now managed by Streetlane as a result of a merger between Streetlane and Great Jones. All property management agreements between the relevant series and Great Jones remain in full force and effect.
  
Property Disposition Fee
 
Upon the disposition and sale of a series property, each series will be charged a market rate property disposition fee that will cover property sale expenses such as brokerage commissions, and title escrow and closing costs. It is expected that this disposition fee charged to a series will range from six percent (6%) to seven percent (7%) of the property sale price. To the extent that the actual property disposition fees are less than the amount charged to the series, the manager will receive the difference as income.
 
Following the sale of a property, the manager will distribute the proceeds of such sale, net of the property disposition fee, to the interest holders of the applicable series (after payment of any accrued liabilities or debt on the property or of the series at that time).
  
Operating Expenses
  
Each series of our company will be responsible for the costs and expenses attributable to the activities of our company related to such series including, but not limited to:
  
 
any and all fees, costs and expenses incurred in connection with the management of a series property and preparing any reports and accounts of each series, including, but not limited to, audits of a series’ annual financial statements, tax filings and the circulation of reports to investors;
  
 
any and all insurance premiums or expenses;
  
 
any withholding or transfer taxes imposed on our company or a series or any of the members;
  
 
any governmental fees imposed on the capital of our company or a series;
 
any legal fees and costs (including settlement costs) arising in connection with any litigation or regulatory investigation instituted against our company, a series or a property manager in connection with the affairs of our company or a series, or relating to legal advice directly relating to our company’s or a series’ legal affairs;
   
 
any fees, costs and expenses of a third-party registrar and transfer agent appointed by the manager in connection with a series;
  
 
any indemnification payments;
  
 
any costs, fees, or payments related to interest or financing expenses for a given series;
  
 
any potential HOA or association fees related to a given series;
  
 
the costs of any third parties engaged by the manager in connection with the operations of our company or a series; and
  
 
any similar expenses that may be determined to be Operating Expenses, as determined by the manager in its reasonable discretion.
  
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The manager will bear its own expenses of an ordinary nature.
  
If the Operating Expenses exceed the amount of revenues generated from a series property and cannot be covered by any Operating Expense reserves on the balance sheet of such series property, the manager may (a) pay such Operating Expenses and not seek reimbursement, (b) loan the amount of the Operating Expenses to the applicable series, on which the manager may impose a reasonable rate of interest, and be entitled to reimbursement of such amount from future revenues generated by such series property (which we refer to as Operating Expenses Reimbursement Obligation(s)), and/or (c) cause additional interests to be issued in such series in order to cover such additional amounts.  See “Description of Business—Operating Expenses.”
  
The Arrived Platform
  
Arrived Holdings, Inc., the manager, owns and operates a web-based and mobile accessible investment platform, the Arrived platform. Through the use of the Arrived platform, investors can browse and screen the investments offered by each of our series and electronically sign legal documents to purchase series interests.
  
Transferability
  
The manager may refuse a transfer by an interest holder of its interest in a series if such transfer would result in (a) there being more than 2,000 beneficial owners in such series or more than 500 beneficial owners that are not “accredited investors,” (b) the assets of a series being deemed plan assets for purposes of ERISA, (c) such interest holder holding in excess of 9.8% of a series, (d) a change of U.S. federal income tax treatment of our company and/or a series, or (e) our company, any series, the manager, or its affiliates being subject to additional regulatory requirements. Furthermore, as the interests are not registered under the Securities Act, transfers of interests may only be effected pursuant to exemptions under the Securities Act and as permitted by applicable state securities laws.  See “Description of the Securities Being Offered–Restrictions on Ownership and Transfer” for more information.
  
Restrictions on Ownership of our Interests
 
To assist each of the series in qualifying as a REIT, the operating agreement provides that generally no person may own, or be deemed to own by virtue of the attribution provisions of the Internal Revenue Code, either more than 9.8% in value or number of interests, whichever is more restrictive, of our outstanding equity capital, or 9.8% in value or number of interests, whichever is more restrictive, of our interests or any class or series of the outstanding interests.  The manager may, in its sole discretion, waive the 9.8% ownership limit with respect to a particular holder of interests.
  
The operating agreement also prohibits any investor from, among other things:
  
 
beneficially or constructively owning interests in a series that would result in our company being “closely held” under Section 856(h) of the Internal Revenue Code, or otherwise cause a series to fail to qualify as a REIT; and
  
 
transferring its interests if such transfer would result in the interests in a series being owned by fewer than 100 persons.
  
Distribution Rights
  
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The manager has sole discretion in determining what distributions, if any, are made to interest holders except as otherwise limited by law or the operating agreement. Our company expects the manager to make distributions on a semi-annual basis.  However, the manager may change the timing of distributions or determine that no distributions shall be made, in its sole discretion. For example, the manager may determine to hold distributions until the effective distribution amount, per investor, equals or exceeds $5.00. In this case, the manager would accrue these distributions in an escrow account or other segregated account to be distributed once the minimum distribution amount has been reached or exceeded. See “Description of the Securities Being Offered-Distribution Rights.” Notwithstanding the above, in order to qualify as a REIT, a series must distribute annually to investors at least 90% of its REIT taxable income, determined without regard to the deduction for distributions paid and excluding any net capital gain, and the manager intends to comply with such requirement in order to qualify as a REIT.
 
The free cash flow of each series will first be used to repay certain expenses and to create reserves at the manager's sole discretion before it will be used for distribution to interest holders.
  
Our Company Information
  
Our principal executive offices are located at 1700 Westlake Ave N, Suite 200, Seattle, WA 98109.  Our telephone number is (814) 277-4833. We maintain a website at www.arrived.com. Information contained on, or accessible through, our website is not incorporated by reference into and does not constitute a part of this offering circular or any other reports or documents we file with or furnish to the Commission.
  
Summary Risk Factors
  
An investment in our interests involves various risks.  You should consider carefully the risks discussed below and under “Risk Factors” before purchasing our interests.  If any of the following risks occur, the business, financial condition or results of operations of each of our series could be materially and adversely affected.  In that case, the value of your interests could decline, and you may lose some or all of your investment.
  
 
We do not have a significant operating history, and there is no guarantee that we will be successful in the operation of our company.
  
 
Changes in general economic and demographic conditions may cause our business to fail.
  
 
We are employing a novel business model, which may make an investment in our interests difficult to evaluate as it is unique to the real estate industry.
 
 
 
An investment in a series offering constitutes only an investment in that series and not in our company or directly in any property.
 
 
We and the manager may not be able to successfully operate our properties or generate sufficient operating cash flows to make or sustain distributions to the holders of our interests.
  
 
We depend on the manager for the success of each series and for access to the manager’s investment professionals and contractors.  We may not find a suitable replacement for the manager if removed, or if key personnel leave the employment of the manager or otherwise become unavailable to us.
  
 
The termination of the manager is generally limited to cause and certain disposition events related to a property, which may make it difficult or costly to end our relationship with the manager in respect of a series and a property.
  
 
Potential conflicts of interest may arise among the manager and its affiliates, on the one hand, and our company and our investors, on the other hand. 
  
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We may be unable to renew leases, lease vacant space or re-lease space on favorable terms or at all as the leases expire, which could materially and adversely affect a series’ financial condition, results of operations and cash flow.
  
 
We may not be able to control a series’ operating costs, or the series’ expenses may remain constant or increase, even if income from a property decreases, causing a series’ results of operations to be adversely affected.

 
The underlying value and performance of any real estate asset will fluctuate with general and local economic conditions.
  
 
Our investors do not elect or vote on our board of directors or the managing member of our company and have limited ability to influence decisions regarding the businesses of the series.
 
 
 
There is currently no public trading market for any of our series interests, and an active market may not develop or be sustained.
  
 
The interest holders will have limited voting rights and will be bound by a majority vote.
  
 
We have not established a minimum distribution payment level for any series and a series may be unable to generate sufficient cash flows from its operations to make distributions to holders of interests at any time in the future.
  
 
Failure of each series to be classified as a separate entity for U.S. federal income tax purposes could adversely affect the timing, amount and character of distributions to a holder of interests.
  
 
The failure of a series to qualify as a REIT would subject it to U.S. federal income tax and applicable state and local taxes, which would reduce the amount of cash available for distribution to holders of our interests.
 
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OFFERING SUMMARY
  
Securities being offered:
  
We are offering the maximum number of interests of each series with a status of “Open” in the “Series Offering Table” at a price per interest set forth therein. Each offering is being conducted on a “best efforts,” no offering minimum basis.
  
Each series of interests is intended to be a separate series of our company for purposes of accounting for assets and liabilities. See “Description of the Securities Being Offered-Description of the Interests” for further details.  The series interests will be non-voting except with respect to certain matters set forth in our operating agreement.  The purchase of interests in a particular series is an investment only in that series and not an investment in our company as a whole.
  
Offering price per series interest:
  As stated in the Series Offering Table above.
     
Minimum and maximum subscription:
  The minimum subscription by an investor in any series is one (1) interest and the maximum subscription by any investor in interests of any series will be limited to 9.8% of the total interests being offered for such series, although such maximum thresholds may be waived by the manager in its sole discretion.
     
Broker:
  We have entered into an agreement with Dalmore, which is acting as our soliciting agent and executing broker in connection with our series offerings. Dalmore is a broker-dealer registered with the Commission and which is or will be registered in each state where our series offerings will be made prior to the launch of each such offering and with such other regulators as may be required to execute the sale transactions and provide related services in connection with our series offerings.  Dalmore is a member of the Financial Industry Regulatory Authority, Inc., or FINRA, and the Securities Investor Protection Corporation, or SIPC. 
     
Transfer Agent:   We have entered into an agreement with Arrived Transfer Agent, LLC, a registered transfer agent, to perform transfer agent functions with respect to the interests of the Series.
     
Broker fees:
  We will pay Dalmore a brokerage fee equal to 1.0% of the amount raised through each series offering. Notwithstanding the foregoing, Dalmore will not receive any fee on funds raised from the sale of any interests to the manager, its affiliates or the sellers of any of the series properties.
     
Restrictions on investment:
  Each investor must be a “qualified purchaser.”  See “Plan of Distribution and Subscription Procedure—Investor Suitability Standards” for further details.  The manager may, in its sole discretion, decline to admit any prospective investor, or accept only a portion of such investor’s subscription, regardless of whether such person is a “qualified purchaser.”  Furthermore, the manager anticipates only accepting subscriptions from prospective investors located in states where Dalmore is registered.    Generally, no sale may be made to you in any of our series offerings if the aggregate purchase price you pay is more than 10% of the greater of your annual income or net worth. Different rules apply to accredited investors and non-natural persons. Before making any representation that your investment does not exceed applicable thresholds, we encourage you to review Rule 251(d)(2)(i)(c) of Regulation A. For general information on investing, we encourage you to refer to www.investor.gov.
     
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Arrived Homes Wallet:   We will utilize a "mobile wallet" feature for payment distributions (the "Arrived Homes Wallet"). The Arrived Homes Wallet is currently the only method through which investors may make payment for subscriptions. The Arrived Homes Wallet will be used to allow you to pay for subscriptions, receive distributions and reinvest distributions. To the extent you do not already have an Arrived Homes Wallet, you must create a wallet account through the Arrived platform. Funds submitted into the Arrived Homes Wallet may earn interest at the prevailing applicable interest rate, and any such interest earned will be retained by our manager. 

Subscription payments may be made from funds already available in your Arrived Homes Wallet at the time your subscription is submitted to us or may be deposited by you into your Arrived Homes Wallet at the time of subscription via ACH debit from another account maintained by you. You should be aware that you may not withdraw subscription payments from your Arrived Homes Wallet once you have submitted your subscription (even before we accept the subscription), unless we reject your subscription. 


No escrow:
  
 
The proceeds of this offering will not be placed into an escrow account. When we accept subscription payments, membership interests will be issued, and investors will become interest holders.
 
 
     
Offering period:
  The series offerings are being conducted as a continuous offering pursuant to Rule 251(d)(3) of Regulation A, meaning that while the offering of a particular series is continuous, active sales of series interests may take place sporadically over the term of the series offering. The term of each series offering will commence within two calendar days after the qualification date of the offering statement of which this offering circular is a part and end no later than the second anniversary of the qualification date of the offering statement.    There will be a separate closing, or closings, with respect to each offering. An initial closing of an offering will occur on the earliest to occur of (i) the date subscriptions for the maximum number of series interests have been accepted, (ii) a date determined by the manager in its sole discretion and (iii) the date one week prior to three months after the offering begins. Additionally, any closing following such initial closing will occur on the earliest to occur of (i) the date subscriptions for the maximum number of series interests have been accepted, (ii) a date determined by the manager in its sole discretion and (iii) the date that is three months after the prior closing for the relevant series offering. A fully executed subscription agreement for any particular investor in a series offering will be accepted or rejected by the manager within 15 days of being received by the series.    If an initial closing has not occurred, an offering will be terminated upon the earliest to occur of (i) the date immediately following the date one week prior to three months after the offering begins and (ii) any date on which the manager elects to terminate the offering for a particular series in its sole discretion.  No securities are being offered by existing security-holders.
     
Use of proceeds to issuer:
 
The proceeds received in the offering will be applied in the following order of priority of payment: 
  
  
  
Acquisition Cost of the Underlying Properties: Actual cost of the underlying property of a series paid to the property seller;
  
  
  
  
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Property Improvements: Each series will pay the manager the costs related to certain renovation projects or capital expenditures related to our acquisition of the property;
  
  
  
  
  
  
Operating and Capital Reserves: Operating and capital reserves are used to pay costs and expenses attributable to the activities of our company related to each series, including maintenance, insurance and other expenses pertaining to the series property; 
  
  
  
  
  
  
Brokerage Fee: A brokerage fee payable to Dalmore equal to 1% of the amount raised through an offering. Notwithstanding the foregoing, Dalmore will not receive any fee on funds raised from the sale of series interests to the manager, its affiliates or the sellers of the properties;
 
       
    Acquisition Expenses: In general, these expenses include all fees, costs and expenses incurred in connection with the evaluation, discovery, investigation, appraisal, development and acquisition of the property related to a series;
       
    Offering Expenses: We will reimburse the manager for offering expenses actually incurred in connection with a series offering in an amount up to 2% of gross offering proceeds. In general, these costs include legal, accounting, escrow, underwriting, filing and compliance costs, as applicable, related to a specific offering; 
       
    Financing and Holding Costs: Each series will pay the manager the costs associated with holding the property before it is rented; and 
       
   
Sourcing Fee: Each series will pay the manager a sourcing fee equal to 3.5% of the purchase price of the series property for that series. The sourcing fee will cover the costs involved in sourcing the property and preparing it for investment.
 
 
 
The manager will be responsible for all offering expenses on behalf of each series and will be reimbursed by the series through the proceeds of the series offering for offering expenses actually incurred in an amount up to 2% of gross offering proceeds. Each series will be responsible for its acquisition expenses which it will pay out of the proceeds of its offering and will reimburse the manager for such costs as well as for certain other costs.  See “Use of Proceeds to Issuer,” “Management Compensation—Reimbursement of Expenses” and “Plan of Distribution and Subscription Procedure—Fees and Expenses” sections for further details.
 
 
 
Risk factors:
 
Investing in the interests of a particular series involves risks. See the section entitled “Risk Factors” in this offering circular and other information included in this offering circular for a discussion of factors you should carefully consider before deciding to invest in our series interests.

 

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RISK FACTORS

 

An investment in our series interests involves risks.  In addition to other information contained elsewhere in this offering circular, you should carefully consider the following risks before acquiring our interests offered by this offering circular.  The occurrence of any of the following risks could materially and adversely affect the business, prospects, financial condition or results of operations of our company, the ability of our company to make cash distributions to the holders of interests and the market price of our interests, which could cause you to lose all or some of your investment in our interests.  Some statements in this offering circular, including statements in the following risk factors, constitute forward-looking statements.  See “Cautionary Statement Regarding Forward-Looking Statements.”

 

Risks Relating to the Structure, Operation and Performance of our Company

 

We have a limited operating history, which makes our future performance difficult to predict.

 

We have a limited operating history. You should consider an investment in our interests in light of the risks, uncertainties and difficulties frequently encountered by other newly formed companies with similar objectives. To be successful in this market, we and the manager must, among other things: 

 

  identify and acquire real estate assets consistent with our investment strategies;

 

  increase awareness of our name within the investment products market;

 

  attract, integrate, motivate and retain qualified personnel to manage our day-to-day operations; and

 

  build and expand our operations structure to support our business.

 

We have minimal operating capital and for the foreseeable future will be dependent upon our ability to finance our operations from the sale of equity or other financing alternatives. The failure to successfully raise operating capital could result in our bankruptcy or other event which would have a material adverse effect on us and our investors.  There can be no assurance that we will achieve our investment objectives.

 

An investment in a series offering constitutes only an investment in that series and not in our company or directly in any property.

 

An investor in an offering will acquire an ownership interest in the series related to that offering and not, for the avoidance of doubt, in (i) our company, (ii) any other series, (iii) the manager, or (iv) directly in a property associated with the series or any property owned by any other series.  This results in limited voting rights of the investor, which are solely related to a particular series, and are further limited by the operating agreement, described further herein. Investors will have voting rights only with respect to certain matters, primarily relating to amendments to the operating agreement that would adversely change the rights of the interest holders and removal of the manager for “cause.”  The manager thus retains significant control over the management of our company, each series and the series properties.  Furthermore, because the interests in a series do not constitute an investment in our company as a whole, holders of the interests in a series are not expected to receive any economic benefit from, or be subject to the liabilities of, the assets of any other series.  In addition, the economic interest of a holder in a series will not be identical to owning a direct undivided interest in a property.

 

Each of our company’s series will hold an interest in a single property, a non-diversified investment.

 

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We intend for each of our series, either directly or through its wholly-owned subsidiary, to own and operate a single property.  Each series’ return on its investment will depend on the revenues generated by such property and the appreciation of the value of the property over time.  These, in turn, are determined by such factors as national and local economic cycles and conditions, financial markets and the economy, competition from existing properties as well as future properties and government regulation (such as tax and building code charges).  The value of a property may decline substantially after a series purchases it.

 

Each of our series will own a single property and as a result of this non-diversified investment strategy, unanticipated capital expenditures could lead to a series’ inability to pay dividends or the loss of your investment entirely.

 

Each series’ dividend stream will depend on the revenues generated by such property and the appreciation of the value of the property over time.  Additionally, a series might not be able to fund an unexpected major capital expenditure and this could lead to a complete loss of your investment.

 

We have limited historical financial operations and only recently commenced operations.

 

Our company was recently formed in January 2023. Our first two series were formed in the first quarter of 2023 and commenced operations upon the closing of the purchase of the properties by such series, which took place in the fourth quarter of 2022.

 

There can be no guarantee that our company will reach its funding target from potential investors with respect to any series or future proposed series.

 

Due to the start-up nature of our company, there can be no guarantee that our company will reach its funding target from potential investors with respect to any series or future proposed series.  In the event our company does not reach a funding target, it may not be able to achieve its investment objectives by acquiring additional properties through the issuance of further series interests and monetizing them to generate distributions for investors.  In addition, if our company is unable to raise funding for additional series, this may impact any investors already holding interests as they will not see the benefits which arise from economies of scale following the acquisition by other series of additional properties.

 

We may incur mortgage indebtedness and other borrowings, including in states and with lenders that do not recognize the series limited liability company structure, which may increase risks to the properties.
    
A series, or our company on behalf of a series, may seek to obtain financing, or to refinance any outstanding indebtedness, including any financing used to obtain the property, with an additional mortgage or other debt financing, including with a third party, secured by the underlying property. Incurring mortgage debt increases the risk of loss since defaults on indebtedness secured by a property may result in lenders initiating foreclosure actions. In that case, a series could lose the property securing the loan that is in default.
    
Further, while we expect each mortgage to be secured by a specific property (and the assets of such property) and be the financial obligation of the applicable series, our company may be required to enter into a loan as the borrower and hold title to the property on behalf of such series in states where our series limited liability structure is not recognized or respected under the laws of the state governing the loan. In that instance, in the event that we default on a loan, we can make no assurance that a lender will not seek to foreclose on the other series’ properties for we hold title. See “If our company’s series limited liability company structure is not respected, then investors may have to share any liabilities of our company with all investors and not just those who hold the same series as them.
    
A series may be unable to obtain financing on favorable terms or at all.
    
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A series may seek additional capital in the form of debt financing from other financing sources. Additional debt financing may not be available on reasonable terms, on a timely basis or at all, and if available, would result in additional payment obligations and may involve agreements that include restrictive covenants that limit a series’ ability to take specific actions, such as incurring additional debt, making capital expenditures, creating liens or paying dividends, which could adversely impact the series’ ability to conduct its business or make distributions to investors.
    
A series that initially acquires a property for all cash but then determines to finance the property, will be subject to additional risks related to its ability to pay debt service that may have a detrimental effect on a series’ ability to make distributions.
 
A property acquired without financing has a different risk profile from one that is acquired with the use of mortgage financing.  In particular, a property with financing must pay its debt service, and any inability to do so could have an adverse effect on a series’ financial condition, results of operations, cash flow, and the market value of its interests and its ability to make distributions to investors.
 

We may not be able to control our operating costs or our expenses may remain constant or increase, even if our revenues do not increase, causing our results of operations to be adversely affected.

 

Factors that may adversely affect our ability to control operating costs include the need to pay for insurance and other operating costs, including real estate taxes, which could increase over time, the need periodically to repair, renovate and re-lease our single family home properties, the cost of compliance with governmental regulation, including zoning, environmental and tax laws, the potential for liability under applicable laws, interest rate levels, principal loan amounts and the availability of financing. If our operating costs increase as a result of any of the foregoing factors, our results of operations may be adversely affected.

 

The expense of owning and operating a property is not necessarily reduced when circumstances such as market factors and competition cause a reduction in income from a property. As a result, if revenues decline, we may not be able to reduce our expenses accordingly. Costs associated with real estate investments, such as real estate taxes, insurance, loan payments and maintenance, generally will not be reduced even if a property is not fully occupied or other circumstances cause our revenues to decrease. If we are unable to decrease operating costs when demand for our properties decreases and our revenues decline, our financial condition, results of operations and our ability to make distributions to our investors may be adversely affected.

 

Competition could limit our ability to acquire attractive investment opportunities and increase the costs of those opportunities which may adversely affect us, including our profitability, and impede our growth

 

The real estate market is highly competitive. We will compete with other entities engaged in real estate investment activities to locate suitable single family homes to acquire and purchasers for our properties. These competitors will include REITs, private real estate funds, domestic and foreign financial institutions, life insurance companies, pension trusts, partnerships and individual investors. Some of these competitors have substantially greater marketing and financial resources than we will have and generally may be able to accept more risk than we can prudently manage, including risks with respect to the creditworthiness of tenants. Competition from these entities may reduce the number of suitable investment opportunities offered to us or increase the bargaining power of property owners. In addition, these same entities seek financing through similar channels to our company. This competition could increase prices for properties of the type we may pursue and adversely affect our profitability and impede our growth.

 

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In addition, these same entities seek financing through similar channels to our company. Disruptions or dislocations in the credit markets could impact the cost and availability of debt to finance real estate investments, which is a key component of our acquisition strategy. A downturn in the credit markets and a potential lack of available debt could limit our ability to pursue suitable investment opportunities and create a competitive advantage for other entities that have greater financial resources than we do. In addition, the number of entities and the amount of funds competing for suitable investments may increase. If we acquire investments at higher prices and/or by using less-than-ideal capital structures, our returns will be lower and the value of our respective assets may not appreciate or may decrease significantly below the amount we paid for such assets. This competition could increase prices for properties of the type we may pursue and adversely affect our profitability and impede our growth.

 

Competition may impede our ability to attract or retain tenants or re-lease space, which could adversely affect our results of operations and cash flow.

 

The leasing of residential real estate is highly competitive.  We will compete based on a number of factors that include location, rental rates, security, suitability of a property’s design to prospective tenants’ needs and the manner in which a property is operated and marketed. The number of competing properties could have a material effect on our occupancy levels, rental rates and on the operating expenses of certain of our properties.  If other lessors and developers of similar spaces in our markets offer leases at prices comparable to or less than the prices we offer on the properties we acquire, we may be unable to attract or retain tenants or re-lease space in our properties, which could adversely affect our results of operations and cash flow.

 

We and the Arrived Platform rely on third-party banks and on third-party computer hardware and software providers. If we are unable to continue utilizing these services or products, our business and ability to operate the corresponding properties may be adversely affected.  
  
We and the Arrived Platform rely on third-party and FDIC-insured depository institutions to process our transactions, including payments for corresponding properties, processing of subscriptions under this offering and distributions to our investors. Under the Automated Clearing House (ACH) rules, if we experience a high rate of reversed transactions (known as “chargebacks”), we may be subject to sanctions and potentially disqualified from using the system to process payments. The Arrived Platform also relies on computer hardware purchased and software licensed from third parties. This purchased or licensed hardware and software may be physically located off-site, as is often the case with “cloud services”. This purchased or licensed hardware and software may not continue to be available on commercially reasonable terms, or at all. If the Arrived Platform cannot continue to obtain such services elsewhere, or if it cannot transition to another processor quickly, our ability to process payments will suffer and your ability to receive distributions will be delayed or impaired.

 

Investments we make will be consistent with our intention for each series to qualify to be taxed as a REIT unless the manager determines that not qualifying as a REIT is in the best interests of a series.

 

We intend for each of the series to elect and qualify to be taxed as a REIT for U.S. federal income tax purposes. REIT limitations restrict us from making investments that would cause less than 75% of the assets of a series to be comprised of assets other than real estate assets, cash and cash items (including receivables) and certain governmental securities, all as defined in the Internal Revenue Code. In addition, in order to maintain each of our series’ status as a REIT, we must meet certain income tests with respect to our gross income and certain additional tests with respect to our assets.

 

Subject to REIT limitations, a series may invest in the equity interests of other issuers in connection with acquisitions of indirect interests in real estate. Such an investment would normally be in the form of a general or limited partnership or membership interests in special purpose partnerships and limited liability companies that own one or more properties.

 

We may fail to successfully operate acquired properties, which could adversely affect us and impede our growth.

 

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The manager’s ability to identify and acquire properties on favorable terms and successfully develop, redevelop and/or operate them may be exposed to significant risks. Agreements for the acquisition of properties are subject to customary conditions to closing, including completion of due diligence investigations and other conditions that are not within our control, which may not be satisfied.  We may be unable to complete an acquisition after incurring certain acquisition-related costs. In addition, if mortgage debt is unavailable at reasonable rates, we may be unable to finance the acquisition on favorable terms in the time period we desire, or at all. We may also spend more than budgeted to make necessary improvements or renovations to acquired properties and may not be able to obtain adequate insurance coverage for new properties.  Any delay or failure to identify, negotiate, finance and consummate such acquisitions in a timely manner and on favorable terms, or operate acquired properties to meet our financial expectations, could impede our growth and have an adverse effect on us, including our financial condition, results of operations, cash flow and the market value of our interests.

 

Disruptions in the financial markets or deteriorating economic conditions could adversely impact the residential real estate market, which could hinder our ability to implement our business strategy and generate returns to you.

 

The success of our business is significantly related to general economic conditions and, accordingly, our business could be harmed by an economic slowdown and downturn in real estate asset values. Periods of economic slowdown or recession, significantly rising interest rates, declining employment levels, decreasing demand for real estate, declining real estate values, or the public perception that any of these events may occur, may result in a general decline in acquisition, disposition and leasing activity, as well as a general decline in the value of real estate and in rents, which in turn would reduce the value of our interests.

 

During an economic downturn, it may also take longer for us to dispose of real estate investments or the selling prices may be lower than originally anticipated. As a result, the carrying value of our real estate investments may become impaired and we could record losses as a result of such impairment or we could experience reduced profitability related to declines in real estate values or rents. Further, as a result of our target leverage, our exposure to adverse general economic conditions will be heightened.

 

In addition, the continuing developments in the Russian war against Ukraine and sanctions which have been announced by the United States and other countries against Russia have caused and may continue to cause significant uncertainty, adding to continuing concerns about supply chain disruptions, inflation and increases in interest rates in the residential real estate market.

 

All the conditions described above could adversely impact our business performance and profitability, which could result in our failure to make distributions to our investors and could decrease the value of an investment in us. In addition, in an extreme deterioration of our business, we could have insufficient liquidity to meet our debt service obligations when they come due in future years. If we fail to meet our payment or other obligations under secured loans, the lenders will be entitled to proceed against the collateral granted to them to secure the debt owed.

 

You may be more likely to sustain a loss on your investment because the manager does not have as strong an economic incentive to avoid losses as do managers who have made significant equity investments in their companies.

 

Because it has not made a significant equity investment in our company, the manager will have little exposure to loss in the value of a series’ interests. Without this exposure, our investors may be at a greater risk of loss because the manager does not have as much to lose from a decrease in the value of our interests as do those managers who make more significant equity investments in their companies.

 

Any adverse changes in the manager’s financial health or our relationship with the manager or its affiliates could hinder our operating performance and the return on your investment.

 

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The manager will utilize the manager’s personnel to perform services on its behalf for us. Our ability to achieve our investment objectives and to pay distributions to our investors is dependent upon the performance of the manager and its affiliates as well as the manager’s real estate professionals in the identification and acquisition of investments, the management of our assets and operation of our day-to-day activities. Any adverse changes in the manager’s financial condition or our relationship with the manager could hinder the manager’s ability to successfully manage our operations and our properties.

 

Compliance with governmental laws, regulations and covenants that are applicable to our residential properties may adversely affect our business and growth strategies.

 

Residential rental properties are subject to various covenants, local laws and regulatory requirements, including permitting and licensing requirements. Local regulations, including municipal or local ordinances, zoning restrictions and restrictive covenants imposed by community developers, may restrict our use of our residential properties and may require us to obtain approval from local officials or community standards organizations at any time with respect to our residential properties, including prior to acquiring any of our residential properties or when undertaking renovations. Among other things, these restrictions may relate to fire and safety, seismic, asbestos-cleanup or hazardous material abatement requirements. We cannot assure you that existing regulatory policies will not adversely affect us or the timing or cost of any future acquisitions or renovations, or that additional regulations will not be adopted that would increase such delays or result in additional costs. Our business and growth strategies may be materially and adversely affected by our ability to obtain permits, licenses and zoning approvals. Our failure to obtain such permits, licenses and zoning approvals could have a material adverse effect on us and cause the value of our interests to decline. 

 

If our company’s series limited liability company structure is not respected, then investors may have to share any liabilities of our company with all investors and not just those who hold the same series as them.

 

Our company is structured as a Delaware series limited liability company that issues interests in a separate series for each property.  Each series will merely be a separate series and not a separate legal entity.  Under the Delaware Limited Liability Company Act (the “LLC Act”), if certain conditions (as set forth in Section 18-215(b) of the LLC Act) are met, the liability of investors holding interests in one series is segregated from the liability of investors holding interests in another series and the assets of one series are not available to satisfy the liabilities of other series.  Although this limitation of liability is recognized by the courts of Delaware, there is no guarantee that if challenged in the courts of another U.S. state or a foreign jurisdiction, such courts will uphold a similar interpretation of Delaware corporation law, and in the past certain jurisdictions have not honored such interpretation.  If our company’s series limited liability company structure is not respected, then investors may have to share any liabilities of our company with all investors and not just those who hold the same series interests as them.  Furthermore, while we intend to maintain separate and distinct records for each series and account for them separately and otherwise meet the requirements of the LLC Act, it is possible a court could conclude that the methods used did not satisfy Section 18-215(b) of the LLC Act and thus potentially expose the assets of a series to the liabilities of another series.  The consequence of this is that investors may have to bear higher than anticipated expenses which would adversely affect the value of their interests or the likelihood of any distributions being made by a particular series to its investors.  In addition, we are not aware of any court case that has tested the limitations on inter-series liability provided by Section 18-215(b) in federal bankruptcy courts and it is possible that a bankruptcy court could determine that the assets of one series should be applied to meet the liabilities of the other series or the liabilities of our company generally where the assets of such other series or of our company generally are insufficient to meet our liabilities.

 

The time devoted by Company management to our business is not expected to be full-time.

 

It is not anticipated that key officers would devote themselves full-time to the business of the Company at the present time. Officers will only be working part-time and devote such time and efforts as they deem reasonably necessary in performance of services for the Company.

 

Risks Relating to the Offerings

 

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We are offering our interests pursuant to Tier 2 of Regulation A and we cannot be certain if the reduced disclosure requirements applicable to Tier 2 issuers will make our interests less attractive to investors as compared to a traditional initial public offering.

 

As a Tier 2 issuer, we are subject to scaled disclosure and reporting requirements which may make an investment in our interests less attractive to investors who are accustomed to enhanced disclosure and more frequent financial reporting.  The differences between disclosures for Tier 2 issuers versus those for emerging growth companies include, without limitation, only needing to file final semiannual reports as opposed to quarterly reports and far fewer circumstances where a current disclosure would be required.  In addition, given the relative lack of regulatory precedent regarding the recent amendments to Regulation A, there is some regulatory uncertainty in regard to how the Commission or the individual state securities regulators will regulate both the offer and sale of our securities, as well as any ongoing compliance that we may be subject to.  For example, a number of states have yet to determine the types of filings and amount of fees that are required for such an offering.  If our scaled disclosure and reporting requirements, or regulatory uncertainty regarding Regulation A, reduces the attractiveness of the interests, we may be unable to raise the funds necessary to fund future offerings, which could impair our ability to offer a diversified portfolio of properties and create economies of scale, which may adversely affect the value of the interests or the ability to make distributions to investors.

 

We are subject to ongoing public reporting requirements that are less rigorous than rules for more mature public companies, and our investors receive less information.

 

We are required to report on an ongoing basis under the reporting rules set forth in Regulation A for Tier 2 issuers. The ongoing reporting requirements under Regulation A are more relaxed than for public companies reporting under the Exchange Act. The differences include, but are not limited to, being required to file only annual and semiannual reports, rather than annual and quarterly reports. Annual reports are due within 120 calendar days after the end of our fiscal year, and semiannual reports are due within 90 calendar days after the end of the first six months of our fiscal year.

 

Although we have no intention currently of voluntarily electing to become a public reporting company under the Exchange Act, we may elect in the future to become a public reporting company under the Exchange Act. If we elect to do so, we will be required to publicly report on an ongoing basis as an emerging growth company, as defined in the JOBS Act, under the reporting rules set forth under the Exchange Act. For so long as we remain an emerging growth company, we may take advantage of certain exemptions from various reporting requirements that are applicable to other Exchange Act reporting companies that are not emerging growth companies, including, but not limited to:

 

  not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act;

 

  being permitted to comply with reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements; and

 

  being exempt from the requirement to hold a non-binding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.

 

In addition, Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We would expect to elect to take advantage of the benefits of this extended transition period. Our financial statements may therefore not be comparable to those of companies that comply with such new or revised accounting standards.

 

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We would expect to take advantage of these reporting exemptions until we are no longer an emerging growth company. We would remain an emerging growth company for up to five years, or until the earliest of (i) the last day of the first fiscal year in which our total annual gross revenues exceed $1 billion; (ii) the date that we become a large accelerated filer as defined in Rule 12b-2 under the Exchange Act, which would occur if the market value of our interests that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter; or (iii) the date on which we have issued more than $1 billion in non-convertible debt during the preceding three-year period.

 

In either case, we will be subject to ongoing public reporting requirements that are less rigorous than Exchange Act rules for companies that are not emerging growth companies, and investors could receive less information than they might expect to receive from more mature public companies.

 

There may be deficiencies with our internal controls that require improvements, and if we are unable to adequately evaluate internal controls, we may be subject to sanctions.

 

As a Tier 2 issuer, we will not need to provide a report on the effectiveness of our internal controls over financial reporting, and we will be exempt from the auditor attestation requirements concerning any such report so long as we are a Tier 2 issuer.  We are in the process of evaluating whether our internal control procedures are effective and therefore there is a greater likelihood of undiscovered errors in our internal controls or reported financial statements as compared to issuers that have conducted such evaluations.

 

If we are required to register under the Exchange Act, it would result in significant expense and reporting requirements that would place a burden on the manager and may divert attention from management of the properties by the manager or could cause the manager to no longer be able to afford to run our business.

 

The Exchange Act requires issuers with more than $10 million in total assets to register its equity securities under the Exchange Act if its securities are held of record by more than 2,000 persons or 500 persons who are not “accredited investors.” While the operating agreement presently prohibits any transfer that would result in any series being held of record by more than 2,000 persons or 500 non-“accredited investors,” there can be no guarantee that we will not exceed those limits and the manager has the ability to unilaterally amend the operating agreement to permit holdings that exceed those limits. If we are required to register under the Exchange Act, it would result in significant expense and reporting requirements that would place a burden on the manager and may divert attention from management of the properties by the manager or could cause the manager to no longer be able to afford to run our business.

 

If our company were to be required to register under the Investment Company Act or the manager were to be required to register under the Investment Advisers Act, it could have a material and adverse impact on the results of operations and expenses of each series and the manager may be forced to liquidate and wind up each series or rescind the offerings for any of the series.

 

Our company is not registered and will not be registered as an investment company under the Investment Company Act of 1940, as amended (the “Investment Company Act”), and the manager is not and will not be registered as an investment adviser under the Investment Advisers Act of 1940, as amended (the “Investment Advisers Act”) and the interests do not have the benefit of the protections of the Investment Company Act or the Investment Advisers Act.  Our company and the manager have taken the position that the properties are not “securities” within the meaning of the Investment Company Act or the Investment Advisers Act, and thus our company’s assets will consist of less than 40% investment securities under the Investment Company Act and the manager is not and will not be advising with respect to securities under the Investment Advisers Act.  This position, however, is based upon applicable case law that is inherently subject to judgments and interpretation.  If our company were to be required to register under the Investment Company Act or the manager were to be required to register under the Investment Advisers Act, it could have a material and adverse impact on the results of operations and expenses of each series and the manager may be forced to liquidate and wind up each series or rescind the offerings for any of the series or the offering for any other series.

 

Possible changes in federal tax laws may materially adversely affect the value of your investment in our interests.

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The Internal Revenue Code is subject to change by Congress, and interpretations of the Code may be modified or affected by judicial decisions, by the Treasury Department through changes in regulations and by the Internal Revenue Service through its audit policy, announcements, and published and private rulings. Although significant changes to the tax laws historically have been given prospective application, no assurance can be given that any changes made in the tax law affecting an investment in any series of our company would be limited to prospective effect. For instance, prior to effectiveness of the Tax Cuts and Jobs Act of 2017, an exchange of the interests of one series for another might have been a non-taxable ‘like-kind exchange’ transaction, while transactions now only qualify for that treatment with respect to real property.  Accordingly, the ultimate effect on an investor’s tax situation may be governed by laws, regulations or interpretations of laws or regulations which have not yet been proposed, passed or made, as the case may be.

 

Risks Related to Conflicts of Interest

 

We are dependent on the manager and its affiliates and their key personnel who provide services to us through the operating agreement, and we may not find a suitable replacement if the operating agreement is terminated, or if key personnel leave or otherwise become unavailable to us, which could have a material adverse effect on our performance.

 

We do not expect to have any employees and we are completely reliant on the manager to provide us with investment and advisory services. We expect to benefit from the personnel, relationships and experience of the manager’s executive team and other personnel and investors of the manager and expect to benefit from the same highly experienced personnel and resources we need for the implementation and execution of our investment strategy.  Each of our executive officers also serves as an officer of the manager. The manager will have significant discretion as to the implementation of our investment and operating policies and strategies. Accordingly, we believe that our success will depend to a significant extent upon the efforts, experience, diligence, skill and relationships of the executive officers and key personnel of the manager. The executive officers and key personnel of the manager will evaluate, negotiate, close and monitor our properties. Our success will depend on their continued service.

 

In addition, we offer no assurance that the manager will remain the manager or that we will continue to have access to the manager’s principals and professionals. If the operating agreement is terminated and no suitable replacement is found to manage us, our ability to execute our business plan will be negatively impacted.

 

The ability of the manager and its officers and other personnel to engage in other business activities, including managing other similar companies, may reduce the time the manager spends managing the business of our company and may result in certain conflicts of interest.

 

Our officers also serve or may serve as officers or employees of Arrived Holdings, Inc., as well as other manager-sponsored vehicles, and other companies unaffiliated with the manager. These other business activities may reduce the time these persons spend managing our business. Further, if and when there are turbulent conditions in the real estate markets or distress in the credit markets or other times when we will need focused support and assistance from the manager, the attention of the manager’s personnel and executive officers and the resources of the manager may also be required by other manager-sponsored vehicles. In such situations, we may not receive the level of support and assistance that we may receive if we were internally managed or if we were not managed by the manager. In addition, these persons may have obligations to other entities, the fulfillment of which might not be in the best interests of us or any of our investors. Our officers and the manager’s personnel may face conflicts of interest in allocating sale, financing, leasing and other business opportunities among the real properties owned by the various companies and our series.

 

The terms of the operating agreement make it difficult to end our relationship with the manager.

 

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Under the terms of the operating agreement, holders of interests in each series of our company have the right to remove our manager as manager of our company, by a vote of two-thirds of the holders of all interests in each series of our company (excluding our manager) voting together, in the event our manager is found by a non-appealable judgment of a court of competent jurisdiction to have committed fraud in connection with a series of interests or our company. Unsatisfactory financial performance does not constitute grounds to terminate and remove the manager under the operating agreement. These provisions make it difficult to end our company’s relationship with the manager, even if we believe the manager’s performance is not satisfactory. 

 

The operating agreement contains provisions that reduce or eliminate duties (including fiduciary duties) of the manager.

 

The operating agreement provides that the manager, in exercising its rights in its capacity as the manager, will be entitled to consider only such interests and factors as it desires, including its own interests, and will have no duty or obligation (fiduciary or otherwise) to give any consideration to any interest of or factors affecting us or any of our investors and will not be subject to any different standards imposed by our bylaws, or under any other law, rule or regulation or in equity. These modifications of fiduciary duties are expressly permitted by Delaware law.

 

There are conflicts of interest among us, the manager and its affiliates.

 

Each of our executive officers is an executive officer of the manager. All the agreements and arrangements between such parties, including those relating to compensation, are not the result of arm’s-length negotiations. Some of the conflicts inherent in our company’s transactions with the manager and its affiliates, and the limitations on such parties adopted to address these conflicts, are described below. The manager and its affiliates will try to balance our interests with their own. However, to the extent that such parties take actions that are more favorable to other entities than us, these actions could have a negative impact on our financial performance and, consequently, on distributions to investors and the value of our interests.

 

The operating agreement provides the manager with broad powers and authority which may exacerbate the existing conflicts of interest among your interests and those of the manager, its executive officers and its other affiliates. Potential conflicts of interest include, but are not limited to, the following:

 

  the manager or an affiliate of the manager may sell certain properties to various series. The manager will be setting the purchase price that a series will pay for such a property, which price may be higher than appraised values or comparable property prices;

 

  the manager, its executive officers and its other affiliates may continue to offer other real estate investment opportunities, including equity offerings similar to this offering, and may make investments in real estate assets for their own respective accounts, whether or not competitive with our business;

 

  the manager, its executive officers and its other affiliates will not be required to disgorge any profits or fees or other compensation they may receive from any other business they own separately from us, and you will not be entitled to receive or share in any of the profits or fees or other compensation from any other business owned and operated by the manager, its executive officers and/or its other affiliates for their own benefit;

 

 

we may engage the manager or affiliates of the manager to perform services at prevailing market rates. Prevailing market rates are determined by the manager based on industry standards and expectations of what the manager would be able to negotiate with third party on an arm’s length basis; and 

     
 

the manager or affiliates of the manager may provide advances or loans to us and charge reasonable market rates of interest, which are determined by the manager based on the manager’s determination of market rates for mortgages of a similar character and term at the time of entry into the purchase and sale agreement; and

 

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  the manager, its executive officers and its other affiliates are not required to devote all of their time and efforts to our affairs. 

 

We do not have a policy that expressly prohibits our directors, officers, security holders or affiliates from having a direct or indirect pecuniary interest in any transaction to which we or any of our subsidiaries has an interest or engaging for their own account in business activities of the types conducted by us.

 

We do not have a policy that expressly prohibits our directors, officers, security holders or affiliates from having a direct or indirect pecuniary interest in any asset to be acquired or disposed of by us or any of our subsidiaries or in any transaction to which we or any of our subsidiaries are a party or have an interest. Additionally, we do not have a policy that expressly prohibits any such persons from engaging for their own account in business activities of the types conducted by us. In addition, our management agreement with the manager does not prevent the manager and its affiliates from engaging in additional management or investment opportunities, some of which could compete with us.

 

The manager’s liability is limited under the operating agreement, and we have agreed to indemnify the manager against certain liabilities.  As a result, we may experience poor performance or losses for which the manager would not be liable. 

 

Pursuant to our company’s operating agreement, the manager will not assume any responsibility other than to render the services called for thereunder and not will be responsible for any action of our board of directors in following or declining to follow the manager’s advice or recommendations. The manager maintains a contractual, as opposed to a fiduciary, relationship with us and our investors. Under the terms of the operating agreement, the manager, its officers, investors, members, managers, directors and personnel, any person controlling or controlled by the manager and any person providing sub-advisory services to the manager will not be liable to us, any subsidiary of ours, our board of directors, or our investors, members or partners or any subsidiary’s investors, members or partners for acts or omissions performed in accordance with and pursuant to the operating agreement, except by reason of acts or omissions constituting bad faith, willful misconduct, gross negligence, or reckless disregard of their duties under the operating agreement. Accordingly, we and our investors will only have recourse and be able to seek remedies against the manager to the extent it breaches its obligations pursuant to the operating agreement. Furthermore, we have agreed to limit the liability of the manager and to indemnify the manager against certain liabilities. We have agreed to reimburse, indemnify and hold harmless the manager, its officers, investors, members, managers, directors and personnel, any person controlling or controlled by the manager and any person providing sub-advisory services to the manager with respect to all expenses, losses, damages, liabilities, demands, charges and claims in respect of, or arising from, acts or omissions of such indemnified parties not constituting bad faith, willful misconduct, gross negligence, or reckless disregard of the manager’s duties, which have a material adverse effect on us. In addition, we may choose not to enforce, or to enforce less vigorously, our rights under the operating agreement because of our desire to maintain our ongoing relationship with the manager.

 

Risks Related to Real Estate Investments Generally

 

Our real estate assets will be subject to the risks typically associated with real estate.

 

Our real estate assets will be subject to the risks typically associated with real estate. The value of real estate may be adversely affected by a number of risks, including: 

 

  natural disasters such as hurricanes, earthquakes and floods;

 

  acts of war or terrorism, including the consequences of terrorist attacks;

 

  adverse changes in national and local economic and real estate conditions;

 

  an oversupply of (or a reduction in demand for) space in the areas where particular properties are located and the attractiveness of particular properties to prospective tenants;

 

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  changes in governmental laws and regulations, fiscal policies and zoning ordinances and the related costs of compliance therewith and the potential for liability under applicable laws;

 

  costs of remediation and liabilities associated with environmental conditions affecting properties; and

 

  the potential for uninsured or underinsured property losses. 

 

The value of each property is affected significantly by its ability to generate cash flow and net income, which in turn depends on the amount of rental or other income that can be generated net of expenses required to be incurred with respect to a property. Many expenditures associated with a property (such as operating expenses and capital expenditures) cannot be reduced when there is a reduction in income from the property. 

 

Our acquisitions will be premised on assumptions about occupancy levels and rental rates, and if those assumptions prove to be inaccurate, our cash flows and profitability will be reduced. These factors may have a material adverse effect on the value that we can realize from our assets.

 

We anticipate involvement in a variety of litigation.

 

We anticipate involvement in a range of legal actions in the ordinary course of business. These actions may include eviction proceedings and other landlord-tenant disputes, challenges to title and ownership rights and issues with local housing officials arising from the condition or maintenance of one or more of our residential properties. These actions can be time consuming and expensive. We cannot assure you that we will not be subject to expenses and losses that may adversely affect our operating results. 

 

We may be subject to unknown or contingent liabilities related to properties that we acquire for which we may have limited or no recourse against the sellers.

 

Properties that we may acquire in the future may be subject to unknown or contingent liabilities for which we may have limited or no recourse against the sellers. Unknown or contingent liabilities might include liabilities for clean-up or remediation of environmental conditions, claims of tenants, vendors or other persons dealing with the acquired properties, tax liabilities and other liabilities whether incurred in the ordinary course of business or otherwise. In the future we may enter into transactions with limited representations and warranties or with representations and warranties that do not survive the closing of the transactions or that only survive for a limited period, in which event we would have no or limited recourse against the sellers of such properties. While we expect to usually require the sellers to indemnify us with respect to breaches of representations and warranties that survive, such indemnification is often limited and subject to various materiality thresholds, a significant deductible or an aggregate cap on losses.

 

As a result, there is no guarantee that we will recover any losses due to breaches by the sellers of their representations and warranties. In addition, the total amount of costs and expenses that we may incur with respect to liabilities associated with acquired properties may exceed our expectations, which may adversely affect our business, financial condition, results of operations and cash flow. Finally, we expect that indemnification agreements between us and the sellers will typically provide that the sellers will retain certain specified liabilities relating to the properties acquired by us. While the sellers are generally contractually obligated to pay all losses and other expenses relating to such retained liabilities, there can be no guarantee that such arrangements will not require us to incur losses or other expenses as well.

 

We may not be able to sell our properties at a price equal to, or greater than, the price for which we purchased such properties, which may lead to a decrease in the value of our assets.

 

The value of a property to a potential purchaser may not increase over time, which may restrict our ability to sell a property, or if we are able to sell such property, may lead to a sale price less than the price that we paid to purchase a property.

 

We may be unable to renew leases or re-lease space as leases expire.

 

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If tenants do not renew their leases upon expiration, we may be unable to re-lease the vacated home. Even if the tenants do re-lease the lease or we are able to re-lease to a new tenant, the terms and conditions of the new lease may not be as favorable as the terms and conditions of the expired lease.  If the rental rates for our properties decrease or we are not able to release a significant portion of our available and soon-to-be-available space, our financial condition, results of operations, cash flow, the market value of our interests and our ability to satisfy our debt obligations and to make distributions to our investors could be adversely affected.

 

The actual rents we receive for a property may be less than estimated market rents, and we may experience a decline in realized rental rates from time to time, which could adversely affect our financial condition, results of operations and cash flow.

 

As a result of potential factors, including competitive pricing pressure in the residential rental market, a general economic downturn and the desirability of our properties compared to other properties, we may be unable to realize our estimated market rents for a property. In addition, depending on market rental rates at any given time as compared to expiring leases in our properties, from time to time rental rates for expiring leases may be higher than starting rental rates for new leases. If we are unable to obtain sufficient rental rates for a property, then our financial condition, results of operations and ability to generate cash flow growth will be negatively impacted.

 

Properties that have significant vacancies could be difficult to sell, which could diminish the return on these properties.

 

A property may incur vacancies either by the expiration of tenant leases or the continued default of tenants under their leases. If vacancies continue for an extended period of time, we may suffer reduced revenues resulting in less cash available for distribution to our investors. In addition, the resale value of the property could be diminished because the market value of our properties may depend in part upon the value of the cash flow generated by the leases associated with that property. Such a reduction in the resale value of a property could also reduce the value of our investors’ investments.

 

Further, a decline in general economic conditions could lead to an increase in tenant defaults, lower rental rates and less demand for residential real estate space in that market. As a result of these trends, we may be more inclined to provide leasing incentives to our tenants in order to compete in a more competitive leasing environment. Such trends may result in reduced revenue and lower resale value of properties, which may reduce the return on your investment.

 

We may be required to make rent or other concessions and/or significant capital expenditures to improve the properties in order to retain and attract tenants, generate positive cash flow or make real estate properties suitable for sale, which could adversely affect us, including our financial condition, results of operations and cash flow.

 

In the event there are adverse economic conditions in the real estate market which lead to an increase in tenant defaults, lower rental rates and less demand for residential real estate space in that market, we may be more inclined to increase tenant improvement allowances or concessions to tenants, accommodate increased requests for renovations and offer improvements or provide additional services to our tenants in order to compete in a more competitive leasing environment, all of which could negatively affect our cash flow.  If the necessary capital is unavailable, we may be unable to make these potentially significant capital expenditures.  This could result in non-renewals by tenants upon expiration of their leases and our vacant space remaining untenanted, which could adversely affect our financial condition, results of operations, cash flow and the market value of our interests. 

 

Our dependence on rental revenue may adversely affect us, including our profitability, our ability to meet our debt obligations and our ability to make distributions to our investors.

 

Our income will be primarily derived from rental revenue from real property.  As a result, our performance will depend on our ability to collect rent from tenants. Our income and funds for distribution would be adversely affected if a significant number of our tenants:

 

  delay lease commencements;
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  decline to extend or renew leases upon expiration;

 

  fail to make rental payments when due; or

 

  declare bankruptcy.

 

Any of these actions could result in the termination of such tenants’ leases with us and the loss of rental revenue attributable to the terminated leases. In these events, we cannot assure you that such tenants will renew those leases or that we will be able to re-lease spaces on economically advantageous terms or at all. The loss of rental revenues from our tenants and our inability to replace such tenants may adversely affect us, including our profitability, our ability to meet our debt and other financial obligations and our ability to make distributions to our investors.

 

We will rely on information supplied by prospective residents.

 

Our resident screening process includes obtaining appropriate identification, a thorough evaluation of credit history and household income, a review of the applicant’s rental history, and a background check for criminal activity. We will make leasing decisions based on information in rental applications completed by a prospective resident and screened by our third party partner, and we cannot be certain that this information is accurate.  Additionally, these applications will be submitted to us at the time we evaluate a prospective resident, and we will not require residents to provide us with updated information during the terms of their leases, notwithstanding the fact that this information can, and frequently does, change over time. For example, increases in unemployment levels or adverse economic conditions in certain of our target markets may adversely affect the creditworthiness of our residents in such markets. Even though this information will not be updated, we will use it to evaluate the characteristics of our portfolio over time. If resident-supplied information is inaccurate or our residents’ creditworthiness declines over time, we may make poor or imperfect leasing decisions and our portfolio may contain more risk than we believe.

 

We may engage in development, redevelopment or repositioning activities in the future, which could expose us to different risks that could adversely affect us, including our financial condition, cash flow and results of operations.

 

We may engage in development, redevelopment or repositioning activities with respect to properties that we acquire as we believe market conditions dictate.  If we engage in these activities, we will be subject to certain risks, which could adversely affect us, including our financial condition, cash flow and results of operations. These risks include, without limitation:

 

  the availability and pricing of financing on favorable terms or at all;

 

  the availability and timely receipt of zoning and other regulatory approvals;

 

  the potential for the fluctuation of occupancy rates and rents at development and redevelopment properties, which may result in our investment not being profitable;

 

  start up, development, repositioning and redevelopment costs may be higher than anticipated;

 

  cost overruns and untimely completion of construction (including risks beyond our control, such as weather, labor conditions or material shortages); and

 

  changes in the pricing and availability of buyers and sellers of such properties.

 

These risks could result in substantial unanticipated delays or expenses and could prevent the initiation or the completion of development and redevelopment activities, any of which could have an adverse effect on our financial condition, results of operations, cash flow, and the market value of our interests and our ability to satisfy our debt obligations and to make distributions to our investors.

 

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Our properties may be subject to impairment charges.

 

We will periodically evaluate our real estate investments for impairment indicators. The judgment regarding the existence of impairment indicators is based on factors such as market conditions, tenant performance and legal structure. For example, the early termination of, or default under, a lease by a tenant may lead to an impairment charge. If we determine that an impairment has occurred, we would be required to make a downward adjustment to the net carrying value of a property. Impairment charges also indicate a potential permanent adverse change in the fundamental operating characteristics of the impaired property. There is no assurance that these adverse changes will be reversed in the future and the decline in the impaired property’s value could be permanent.

 

Our real estate investments are expected to be concentrated in single-family rental properties in select geographic markets.
  
Our strategy is to concentrate our real estate investments on single-family rental properties in select geographic markets that we believe favor future growth in rents and valuations.  A downturn or slowdown in the rental demand for single-family housing generally, or in our target markets specifically, caused by adverse economic, regulatory or environmental conditions, or other events, would have a greater impact on our operating results than if we had more diversified real estate investments.

 

If a tenant declares bankruptcy, we may be unable to collect balances due under relevant leases, which could adversely affect our financial condition and ability to pay distributions to our investors.

 

Any of our tenants, or any guarantor of a tenant’s lease obligations, could be subject to a bankruptcy proceeding pursuant to Chapter 11 of the United States bankruptcy code. A bankruptcy filing by one of our tenants or any guarantor of a tenant’s lease obligations would bar all efforts by us to collect pre-bankruptcy debts from these individuals or entities, unless we receive an enabling order from the bankruptcy court. There is no assurance the tenant or its trustee would agree to assume the lease. If a lease is rejected by a tenant in bankruptcy, we would have only a general unsecured claim for damages that is limited in amount and which may only be paid to the extent that funds are available and in the same percentage as is paid to all other holders of unsecured claims.

 

A tenant or lease guarantor bankruptcy could delay efforts to collect past due balances under the relevant leases and could ultimately preclude full collection of these sums. A tenant or lease guarantor bankruptcy could cause a decrease or cessation of rental payments that would mean a reduction in our cash flow and the amount available to pay distributions to our investors.

 

Joint venture investments could be adversely affected by our lack of sole decision-making authority, our reliance on the financial condition of co-venturers and disputes between us and our co-venturers.

 

We may enter into joint ventures, partnerships and other co-ownership arrangements (including preferred equity investments) for the purpose of making investments. In such event, we would not be in a position to exercise sole decision-making authority regarding the joint venture. Investments in joint ventures may, under certain circumstances, involve risks not present were a third party not involved, including the possibility that partners or co-venturers might become bankrupt or fail to fund their required capital contributions. Co-venturers may have economic or other business interests or goals which are inconsistent with our business interests or goals, and may be in a position to take actions contrary to our policies or objectives. Such investments may also have the potential risk of impasses on decisions, such as a sale, because neither we nor the co-venturer would have full control over the joint venture. In addition, to the extent our participation represents a minority interest, a majority of the participants may be able to take actions which are not in our best interests because of our lack of full control. Disputes between us and co-venturers may result in litigation or arbitration that would increase our expenses and prevent our officers from focusing their time and effort on our business. Consequently, actions by or disputes with co-venturers might result in subjecting properties owned by the joint venture to additional risk. In addition, we may in certain circumstances be liable for the actions of our co-venturers.

 

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Property taxes could increase due to property tax rate changes or reassessment, which could impact our financial condition, results of operations and cash flow.

 

Even if a series qualifies as a REIT for U.S. federal income tax purposes, the series generally will be required to pay state and local taxes on its property. The real property taxes on our properties may increase as property tax rates change or as our properties are assessed or reassessed by taxing authorities. If the property taxes we pay increase, our financial condition, results of operations, cash flow, the value of our interests and our ability to satisfy our principal and interest obligations and to make distributions to our investors could be adversely affected. 

 

Uninsured losses relating to real property or excessively expensive premiums for insurance coverage, including due to the non-renewal of the Terrorism Risk Insurance Act of 2002, or the TRIA, could reduce our cash flows and the return on our investors’ investments.

 

There are types of losses, generally catastrophic in nature, such as losses due to wars, acts of terrorism, earthquakes, floods, hurricanes, pollution or environmental matters that are uninsurable or not economically insurable, or may be insured subject to limitations, such as large deductibles or co-payments. Insurance risks associated with such catastrophic events could sharply increase the premiums we pay for coverage against property and casualty claims.

 

This risk is particularly relevant with respect to potential acts of terrorism. The TRIA, under which the U.S. federal government bore a significant portion of insured losses caused by terrorism, expired on December 31, 2020, and there can be no assurance that Congress will act to renew or replace the TRIA following its expiration. If the TRIA is not renewed or replaced, terrorism insurance may become difficult or impossible to obtain at reasonable costs or at all, which may result in adverse impacts and additional costs to us. 

 

Changes in the cost or availability of insurance due to the non-renewal of the TRIA or for other reasons could expose us to uninsured casualty losses. If any of our properties incurs a casualty loss that is not fully insured, the value of our assets will be reduced by any such uninsured loss, which may reduce the value of our investors’ investments. In addition, other than any working capital reserve or other reserves we may establish, we have no source of funding to repair or reconstruct any uninsured property. Also, to the extent we must pay unexpectedly large amounts for insurance, we could suffer reduced earnings that would result in lower distributions to investors.

 

Additionally, mortgage lenders insist in some cases that multifamily property owners purchase coverage against terrorism as a condition for providing mortgage loans. Accordingly, to the extent terrorism risk insurance policies are not available at reasonable costs, if at all, our ability to finance or refinance our properties could be impaired. In such instances, we may be required to provide other financial support, either through financial assurances or self-insurance, to cover potential losses. We may not have adequate, or any, coverage for such losses.

 

The consequences of climate change may adversely affect our business.

 

We may experience losses related to extreme weather and changes in precipitation and temperature, which may result in physical damage or a decrease in demand for a property that we acquire. Should the impact of climate change be material in nature or occur for lengthy periods of time, the financial condition or results of operations for a property and its related series would be adversely affected. Moreover, we cannot assure you that any insurance coverage we carry will be adequate to cover all losses related to climate change. In addition, changes in federal, state and local legislation and regulations designed to address climate change could result in increased capital expenditures to improve the energy efficiency of a property that we acquire in order to comply with such legislation and regulations.

 

Acquiring or attempting to acquire multiple properties in a single transaction may adversely affect our operations.

 

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From time to time, we may attempt to acquire multiple properties in a single transaction. Multiple property portfolio acquisitions are more complex and expensive than single-property acquisitions, and the risk that a portfolio acquisition does not close may be greater than in a single-property acquisition. A seller may require that a group of properties be purchased as a package even though we may not want to purchase one or more properties in the portfolio. In these situations, if we are unable to identify another person or entity to acquire the unwanted properties, we may be required to operate or attempt to dispose of these properties. To acquire multiple properties in a single transaction we may be required to accumulate a large amount of cash. We would expect the returns that we earn on such cash to be less than the ultimate returns in real property and therefore, accumulating such cash could reduce the funds available for distributions to our investors.

 

Tenant relief laws may negatively impact our rental income and profitability.

 

As landlord of numerous residential properties, we may be involved in evicting residents who are not paying their rent or are otherwise in material violation of the terms of their lease. Eviction activities will impose legal and managerial expenses that will raise our costs. The eviction process is typically subject to legal barriers, mandatory “cure” policies and other sources of expense and delay, each of which may delay our ability to gain possession and stabilize the home. Additionally, state and local landlord-tenant laws may impose legal duties to assist residents in relocating to new housing or restrict the landlord’s ability to recover certain costs or charge residents for damage that residents cause to the landlord’s premises. We and any property managers we hire will need to be familiar with and take all appropriate steps to comply with all applicable landlord-tenant laws, and we will need to incur supervisory and legal expenses to ensure such compliance. To the extent that we do not comply with state or local laws, we may be subjected to civil litigation filed by individuals, in class actions or by state or local law enforcement. We may be required to pay our adversaries’ litigation fees and expenses if judgment is entered against us in such litigation or if we settle such litigation. 

 

Rent control or rent stabilization laws could prevent us from raising rents to offset increases in operating costs.

 

Various states, cities, or municipalities have a system of rent regulations known as rent stabilization and rent control. Tenants of regulated apartments are entitled to receive required services and to have their leases renewed, and may not be evicted except on grounds allowed by law. If we acquire properties that include regulated apartments, these regulations could limit the amount of rent we are able to collect, which could have a material adverse effect on our ability to fully take advantage of the investments that we make in our properties.  In addition, there can be no assurance that changes to rent control or rent stabilization laws will not have a similar or greater negative impact on our ability to collect rents. 

 

Our targeted investments may include condominium interests. Condominium interests are subject to special risks that may reduce your return on investment.

 

Our targeted investments may include condominium interests, which is a type of common ownership interest. Common ownership interests are subject to special risks that may reduce your return on investment. For example, common ownership interests are governed by associations in which we, as a condominium unit owner, have a vote. We may be outvoted by the other members of the condominium respecting matters that materially impact the management, appearance, safety or financial soundness of the dwelling or of the association.

 

The value of common ownership interests may be decreased by the default of other interest holders on their homeowners association, or HOA, fees or similar fees. If enough holders default on their fees, the HOA’s liquidity and net worth may decrease dramatically. If the HOA or board is forced to foreclose on any delinquent interests representing the condominium interests, a lowered value realized at the foreclosure sale may adversely impact the market value of every other unit.

 

We, as a common ownership interest owner, will also be required to pay HOA fees. If we default in our payment, we may be obligated to pay financial penalties or, in severe circumstances, our unit may be foreclosed on by the board or the HOA. If the board or HOA is mismanaged or if the applicable property suffers from neglect or deferred maintenance, HOA fees may increase, which may reduce our cash flow from operations and your ability to receive distributions.

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Our targeted investments may be subject to rules and regulations of HOAs.
  
A significant number of our targeted investments may be part of HOAs, which are private entities that regulate the activities of, and levy assessments on properties in, a residential subdivision. HOAs in which we own properties may have onerous or arbitrary rules that restrict our ability to renovate, market or lease our properties or require us to renovate or maintain such properties at standards or costs that are in excess of our planned operating budgets. Such rules may include requirements for landscaping, limitations on signage promoting a property for lease or sale, or the use of specific materials in renovations. The number of HOAs that impose limits on the number of property owners who may rent their homes is increasing. Such restrictions limit acquisition opportunities and could cause us to incur additional costs to resell the property and opportunity costs of lost rental income. Furthermore, many HOAs impose restrictions on the conduct of occupants of homes and the use of common areas and we may have tenants who violate HOA rules and for which we may be liable as the property owner and for which we may not be able to obtain reimbursement from the resident. Additionally, the boards of directors of the HOAs may not make important disclosures about the properties or may block our access to HOA records, initiate litigation, restrict our ability to sell our properties, impose assessments or arbitrarily change the HOA rules. We may be unaware of or unable to review or comply with HOA rules before purchasing the property and any such excessively restrictive or arbitrary regulations may cause us to sell such property at a loss, prevent us from renting such property or otherwise reduce our cash flow from such property, which would have an adverse effect on our returns on these properties.

 

Real estate investments are relatively illiquid and may limit our flexibility.

 

Real estate investments are relatively illiquid, which may tend to limit our ability to react promptly to changes in economic or other market conditions.  Our ability to dispose of assets in the future will depend on prevailing economic and market conditions.  Our inability to sell our properties on favorable terms or at all could have an adverse effect on our sources of working capital and our ability to satisfy our debt obligations.  In addition, real estate can at times be difficult to sell quickly at prices we find acceptable. When we sell any of our assets, we may recognize a loss on such sale. The Internal Revenue Code also imposes restrictions on REITs, which are not applicable to other types of real estate companies, on the disposal of properties.  For example, our ability to sell our properties may also be limited by our need to avoid the 100% prohibited transactions tax that is imposed on gain recognized by a REIT from the sale of property characterized as dealer property. In order to ensure that we avoid such characterization, we may be required to hold our properties for a minimum period of time and comply with certain other requirements in the Internal Revenue Code or dispose of our properties through a “taxable REIT subsidiary,” or TRS.  These potential difficulties in selling real estate may limit our ability to promptly change, or reduce our exposure to, the properties we acquire in response to changes in economic or other conditions.

 

The failure of any bank in which we deposit our funds could reduce the amount of cash we have available to pay distributions to our investors and make additional investments.

 

We intend to diversify our cash and cash equivalents among several banking institutions in an attempt to minimize exposure to any one of these entities. However, the Federal Deposit Insurance Corporation, or FDIC, only insures amounts up to $250,000 per depositor per insured bank. We expect to have cash and cash equivalents and restricted cash deposited in certain financial institutions in excess of federally insured levels. If any of the banking institutions in which we have deposited funds ultimately fails, we may lose our deposits over $250,000. 

 

The occurrence of a cyber-incident, or a deficiency in our cyber security, could negatively impact our business by causing a disruption to our operations, a compromise or corruption of our confidential information, or damage to our business relationships, all of which could negatively impact our financial results.

 

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We collect and retain certain personal information provided by our investors and tenants in the properties owned by the series.  While we expect to implement a variety of security measures to protect the confidentiality of this information and periodically review and improve our security measures, we can provide no assurance that we will be able to prevent unauthorized access to this information.  A cyber-incident is considered to be any adverse event that threatens the confidentiality, integrity, or availability of our information resources. More specifically, a cyber-incident is an intentional attack or an unintentional event that can include gaining unauthorized access to systems to disrupt operations, corrupt data, or steal confidential information. As our reliance on technology has increased, so have the risks that could directly result from the occurrence of a cyber incident including operational interruption, damage to our relationship with our tenants, and private data exposure, any of which could negatively impact our reputation and financial results.

 

We may enter into long-term leases with tenants in certain properties, which may not result in fair market rental rates over time.

 

We may enter into long-term leases with tenants of certain of the properties or include renewal options that specify a maximum rate increase. These leases would provide for rent to increase over time; however, if we do not accurately judge the potential for increases in market rental rates, we may set the terms of these long-term leases at levels such that, even after contractual rent increases, the rent under our long-term leases is less than then-current market rates. Further, we may have no ability to terminate those leases or to adjust the rent to then-prevailing market rates. As a result, our cash available for distribution to our investors could be lower than if we did not enter into long-term leases. 

 

We will depend on tenants for our revenue, and lease defaults or terminations could reduce our net income and limit our ability to make distributions to our investors.

 

The success of our investments materially depends on the financial stability of our tenants. A default or termination by a tenant on its lease payments to us would cause us to lose the revenue associated with such lease and require us to find an alternative source of revenue to meet mortgage payments and prevent a foreclosure, if the property is subject to a mortgage. If a tenant defaults we may experience delays in enforcing our rights as landlord and may incur substantial costs in protecting our investment and re-leasing our property. If a tenant defaults on or terminates a lease, we may be unable to lease the property for the rent previously received or sell the property without incurring a loss. These events could cause us to reduce the amount of distributions to our investors.

 

Potential development and construction delays and resultant increased costs and risks may hinder our operating results and decrease our net income.

 

From time to time we may acquire unimproved real property or properties that are under development or construction. Investments in such properties will be subject to the uncertainties associated with the development and construction of real property, including those related to re-zoning land for development, environmental concerns of governmental entities and community groups and our builders’ ability to build in conformity with plans, specifications, budgeted costs and timetables. If a builder fails to perform, we may resort to legal action to rescind the purchase or the construction contract or to compel performance. A builder’s performance may also be affected or delayed by conditions beyond the builder’s control. Delays in completing construction could also give tenants the right to terminate preconstruction leases. We may incur additional risks when we make periodic progress payments or other advances to builders before they complete construction. These and other factors can result in increased costs of a project or loss of our investment. In addition, we will be subject to normal lease-up risks relating to newly constructed projects. We also must rely on rental income and expense projections and estimates of the fair market value of property upon completion of construction when agreeing upon a purchase price at the time we acquire the property. If our projections are inaccurate, we may pay too much for a property, and the return on our investment could suffer. 

 

Actions of any joint venture partners that we may have in the future could reduce the returns on joint venture investments and decrease our investors’ overall return.

 

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We may enter into joint ventures to acquire properties. We may also purchase and develop properties in joint ventures or in partnerships, co-tenancies or other co-ownership arrangements. Such investments may involve risks not otherwise present with other methods of investment, including, for example, the following risks:

 

  that our co-venturer, co-tenant or partner in an investment could become insolvent or bankrupt;

 

  that such co-venturer, co-tenant or partner may at any time have economic or business interests or goals that are or that become inconsistent with our business interests or goals;

 

  that such co-venturer, co-tenant or partner may be in a position to take action contrary to our instructions or requests or contrary to our policies or objectives; or

 

  that disputes between us and our co-venturer, co-tenant or partner may result in litigation or arbitration that would increase our expenses and prevent our officers from focusing their time and effort on our operations. 

 

Any of the above might subject a property to liabilities in excess of those contemplated and thus reduce our returns on that investment and the value of your investment.

 

Inflation may adversely affect our financial condition and results of operations.
Inflation has significantly increased since the start of 2021. Inflationary pressures may adversely affect our direct and indirect operating and development costs, including for labor at the corporate, property management and development levels, third-party contractors and vendors, building materials, insurance, transportation and taxes. Although our leases may permit some price increases to be charged back to our tenants, to the extent we are unable to offset these cost increases through higher rents or other measures, our operating results will be adversely affected.  Our residents may also be adversely impacted by higher cost of living expenses, including food, energy and transportation, which may increase our rate of tenant defaults and harm our operating results.

 

Costs imposed pursuant to governmental laws and regulations may reduce our net income and the cash available for distributions to our investors.

 

Real property and the operations conducted on real property are subject to federal, state and local laws and regulations relating to protection of the environment and human health. We could be subject to substantial liability in the form of fines, penalties or damages for noncompliance with these laws and regulations. Even if we are not subject to liability, other costs, which we would undertake to avoid or mitigate any such liability, such as the cost of removing or remediating hazardous or toxic substances could be substantial. These laws and regulations generally govern wastewater discharges, air emissions, the operation and removal of underground and above-ground storage tanks, the use, storage, treatment, transportation and disposal of solid and hazardous materials, the remediation of contamination associated with the release or disposal of solid and hazardous materials, the presence of toxic building materials and other health and safety-related concerns.

 

Certain environmental laws and common law principles could be used to impose liability for the release of and exposure to hazardous substances, including asbestos-containing materials and lead-based paint. These costs could be substantial. Third parties may seek recovery from real property owners or operators for personal injury or property damage associated with exposure to released hazardous substances and governments may seek recovery for natural resource damage. The costs of defending against claims of environmental liability, of complying with environmental regulatory requirements, of remediating any contaminated property, or of paying personal injury, property damage or natural resource damage claims could materially adversely affect our business, assets or results of operations and, consequently, reduce the amounts available for distribution to our investors.

 

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Some of these laws and regulations may impose joint and several liability on the tenants, owners or operators of real property for the costs to investigate or remediate contaminated properties, regardless of fault, whether the contamination occurred prior to purchase, or whether the acts causing the contamination were legal. Activities of our tenants, the condition of properties at the time we buy them, operations in the vicinity of our properties, such as the presence of underground storage tanks, or activities of unrelated third parties may affect our properties. 

 

The presence of hazardous substances, including hazardous substances that have not been detected, or the failure to properly manage or remediate these substances, may hinder our ability to sell, rent or pledge such property as collateral for future borrowings. Any material expenditures, fines, penalties or damages we must pay will reduce our ability to make distributions to our investors and may reduce the value of your investment. 

 

The costs of defending against claims of environmental liability, of complying with environmental regulatory requirements, of remediating any contaminated property, or of paying personal injury or other damage claims could reduce our cash available for distributions to our investors.

 

 

The cost of defending against claims of liability, of compliance with environmental regulatory requirements, of remediating any contaminated property, or of paying personal injury claims could materially adversely affect our business, assets or results of operations and, consequently, amounts available for distribution to our investors. We may be subject to all the risks described here even if we do not know about the hazardous materials and if the previous owners did not know about the hazardous materials on the property.

 

In addition, when excessive moisture accumulates in buildings or on building materials, mold growth may occur, particularly if the moisture problem remains undiscovered or is not addressed over a period of time. Some molds may produce airborne toxins or irritants. Concern about indoor exposure to mold has been increasing, as exposure to mold may cause a variety of adverse health effects and symptoms, including allergic or other reactions. As a result, the presence of significant mold at any of our projects could require us to undertake a costly remediation program to contain or remove the mold from the affected property or development project, which would adversely affect our operating results.

 

Environmental laws also may impose liens on property or restrictions on the manner in which property may be used or businesses may be operated, and these restrictions may require substantial expenditures or prevent us or our property manager and its assignees from operating such properties. Some of these laws and regulations have been amended so as to require compliance with new or more stringent standards as of future dates. Compliance with new or more stringent laws or regulations or stricter interpretation of existing laws may require us to incur material expenditures. Future laws, ordinances or regulations may impose material environmental liability. 

 

Costs associated with complying with the Americans with Disabilities Act and similar laws (including but not limited to the Fair Housing Amendments Act of 1988 and the Rehabilitation Act of 1973) may decrease cash available for distributions to our investors.

 

Our properties may be subject to the Americans with Disabilities Act of 1990, as amended, or the ADA. Under the ADA, all places of public accommodation are required to comply with federal requirements related to access and use by disabled persons. The Fair Housing Amendments Act of 1988 requires apartment communities first occupied after March 13, 1991 to comply with design and construction requirements for disabled access. For projects receiving federal funds, the Rehabilitation Act of 1973 also has requirements regarding disabled access.  If one or more of our properties that we acquire are not in compliance with such laws, then we could be required to incur additional costs to bring the property into compliance. We cannot predict the ultimate amount of the cost of compliance with such laws. Noncompliance with these laws could also result in the imposition of fines or an award of damages to private litigants. Substantial costs incurred to comply with such laws, as well as fines or damages resulting from actual or alleged noncompliance with such laws, could adversely affect us, including our future results of operations and cash flows.

 

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Declines in the market values of the properties we invest in may adversely affect periodic reported results of operations and credit availability, which may reduce earnings and, in turn, cash available for distribution to our investors.

 

Some of the assets we invest in may be classified for accounting purposes as “available-for-sale.” These investments will be carried at estimated fair value and temporary changes in the market values of those assets will be directly charged or credited to investors’ equity without impacting net income on the income statement. Moreover, if we determine that a decline in the estimated fair value of an available-for-sale asset falls below its amortized value and is not temporary, we will recognize a loss on that asset on the income statement, which will reduce our earnings in the period recognized.

 

A decline in the market value of the assets we invest in may adversely affect us particularly in instances where we have borrowed money based on the market value of those assets. If the market value of those assets declines, the lender may require us to post additional collateral to support the loan. If we were unable to post the additional collateral, we may have to sell assets at a time when we might not otherwise choose to do so. A reduction in credit available may reduce our earnings and, in turn, cash available for distribution to our investors.

 

Further, credit facility providers may require us to maintain a certain amount of cash reserves or to set aside unlevered assets sufficient to maintain a specified liquidity position, which would allow us to satisfy our collateral obligations. As a result, we may not be able to leverage our assets as fully as we would choose, which could reduce our return on equity. If we are unable to meet these contractual obligations, our financial condition could deteriorate rapidly.

 

Market values of our investments may decline for a number of reasons, such as changes in prevailing market rates, increases in defaults, increases in voluntary prepayments for those investments that we have that are subject to prepayment risk, widening of credit spreads and downgrades of ratings of the securities by ratings agencies.

 

A prolonged economic slowdown, a lengthy or severe recession or declining real estate values could harm our operations.

 

Our investments may be susceptible to economic slowdowns or recessions, which could lead to financial losses in our investments and a decrease in revenues, net income and assets. An economic slowdown or recession, in addition to other non-economic factors such as an excess supply of properties, could have a material negative impact on the values of, and the cash flows from, residential real estate properties, which could significantly harm our revenues, results of operations, financial condition, business prospects and our ability to make distributions to our investors. 

 

Deficiencies in our internal controls over financial reporting could adversely affect our ability to present accurately our financial statements and could materially and adversely affect us, including our business, reputation, results of operations, financial condition and liquidity.

 

Effective internal controls over financial reporting are necessary for us to accurately report our financial results. There can be no guarantee that our internal controls will be effective in accomplishing all control objectives all of the time. As we grow our business, our internal controls will become more complex, and we may require significantly more resources to ensure our internal controls remain effective. Deficiencies, including any material weakness, in our internal control over financial reporting could result in misstatements of our results of operations that could require a restatement, failing to meet our reporting obligations and causing investors to lose confidence in our reported financial information. These events could materially and adversely affect us, including our business, reputation, results of operations, financial condition and liquidity.

 

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Risks Related to U.S. Federal Income Tax Matters
 
Failure of a series to be classified as a separate entity for U.S. federal income tax purposes could adversely affect the timing, amount and character of distributions to investors. 
We intend to treat each series as a separate business entity for U.S. federal income tax purposes and the series LLC organization as a non-entity for U.S. federal income tax purposes.  Consistent with this approach, the IRS has issued proposed Treasury Regulations that provide that each individual series of a domestic series LLC organization will generally be treated as a separate entity formed under local law, with each such individual series' classification for U.S. federal income tax purposes determined under general tax principles and the entity classification (also known as "check-the-box") rules.  Although not expected based on the proposed Treasury Regulations, if the IRS were to adopt a different approach than the one adopted in the proposed Treasury Regulations and successfully challenge our treatment of a series as a separate business entity and the series LLC organization as a non-entity for U.S. federal income tax purposes, we expect that the series LLC organization would be treated as a single corporation that has elected and operated to be taxed as a REIT for U.S. federal income tax purposes.  In that event, the timing, amount and character of distributions to investors could be adversely impacted and the ability of the series LLC organization to be taxed as a REIT could be adversely impacted because the activity of a series would be aggregated as the activities of a single REIT.

 

The failure of a series to qualify or remain qualified as a REIT would subject the series to U.S. federal income tax and potentially state and local tax and would adversely affect the series’ operations and the market price of the series’ interests.

 

We intend for each series to elect and qualify to be taxed as a REIT under Sections 856 through 860 of the Internal Revenue Code, commencing with the first full taxable year following the closing of a series offering and intend to operate such series in a manner that would allow us to continue to qualify as a REIT. However, we may terminate a series’ REIT qualification, if the manager determines that not qualifying as a REIT is in the best interests of a series, or inadvertently. A series’ qualification as a REIT depends upon its ability to meet, through actual annual operating results, distribution levels, and diversity of stock ownership, the various and complex REIT qualification tests imposed under the Internal Revenue Code. To qualify as a REIT, a series must comply with certain highly technical and complex requirements. We cannot be certain that a series has complied or will comply with these requirements because there are few judicial and administrative interpretations of these provisions. In addition, facts and circumstances that may be beyond our control may affect our ability for each series to qualify as a REIT. We cannot assure you that new legislation, regulations, administrative interpretations or court decisions will not change the tax laws significantly with respect to a series’ qualification as a REIT or with respect to the federal income tax consequences of qualification. We cannot assure you that we will qualify or will remain qualified as a REIT.

 

If a series fails to qualify as a REIT, it will not be allowed to deduct distributions to investors in computing taxable income and will be subject to federal income tax at regular rates. In addition, the series would be barred from qualification as a REIT for the four taxable years following disqualification. The additional tax incurred at regular corporate rates would significantly reduce the taxable cash flow available for distribution to investors and for debt service. Furthermore, the series would no longer be required by the Internal Revenue Code to make any distributions to our investors as a condition of REIT qualification. Any distributions to investors would be taxable as ordinary income to the extent of the series current and accumulated earnings and profits.

 

Even if a series qualifies as a REIT, in certain circumstances, it may incur tax liabilities that would reduce its cash available for distribution to our investors.

 

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Even if a series qualifies and maintains its status as a REIT, it may be subject to U.S. federal, state and local income taxes. For example, net income from the sale of properties that are “dealer” properties sold by a REIT (a “prohibited transaction” under the Internal Revenue Code) will be subject to a 100% excise tax, and some state and local jurisdictions may tax some or all of our income because not all states and localities treat REITs the same as they are treated for U.S. federal income tax purposes. A series may not make sufficient distributions to avoid excise taxes applicable to REITs. A series also may decide to retain net capital gain we earn from the sale or other disposition of our property and pay U.S. federal income tax directly on such income. In that event, our investors would be treated as if they earned that income and paid the tax on it directly. However, investors that are tax-exempt, such as charities or qualified pension plans, would have no benefit from their deemed payment of such tax liability unless they file U.S. federal income tax returns and thereon seek a refund of such tax. A series also will be subject to corporate tax on any undistributed REIT taxable income. Cash used for paying taxes will not be available for distribution or reinvestment by the series.

 

A series could fail to qualify as a REIT if it cannot make distributions sufficient to meet the annual distribution requirements.
  
In order to qualify as a REIT, a series must distribute annually to investors at least 90% of its REIT taxable income, determined without regard to the deduction for distributions paid and excluding any net capital gain.  To the extent that a series does not distribute all of its net capital gains or distributes at least 90%, but less than 100% of its REIT taxable income, as adjusted, the series will have to pay tax on those amounts at the federal corporate tax rate. A series will be subject to U.S. federal income tax on its undistributed REIT taxable income and net capital gain and to a 4% nondeductible excise tax on any amount by which distributions it pays with respect to any calendar year are less than the sum of (1) 85% of its ordinary income, (2) 95% of its capital gain net income and (3) 100% of its undistributed income from prior years. These requirements could cause a series to distribute amounts that otherwise would be spent on investments in real estate assets and it is possible that a series might be required to borrow funds, possibly at unfavorable rates, or sell assets to fund these distributions.  Although a series intends to make distributions sufficient to meet the annual distribution requirements and to avoid U.S. federal income and excise taxes on earnings while a series qualifies as a REIT, it is possible that a series might not always be able to do so.

 

The taxation of distributions to our investors can be complex; however, distributions that we make to our investors generally will be taxable as ordinary income or constitute a return of capital, which may reduce your anticipated return from an investment in us.

 

Distributions that a series makes to our taxable investors out of current and accumulated earnings and profits (and not designated as capital gain dividends or qualified dividend income) generally will be taxable as ordinary income. However, a portion of our distributions may (1) constitute a return of capital generally to the extent that they exceed our accumulated earnings and profits as determined for U.S. federal income tax purposes, (2) be designated by us as capital gain dividends generally taxable as long-term capital gain to the extent that they are attributable to net capital gain recognized by us, or (3) be designated by us as qualified dividend income generally to the extent they are attributable to dividends we receive from our TRSs. A return of capital is not taxable, but has the effect of reducing the basis of an investor’s investment in our interests. Due to our investment in real estate, depreciation deductions and interest expense may reduce our earnings and profits in our early years with the result that a large portion of distributions to our investors in early years may constitute a return of capital rather than ordinary income.

 

Dividends payable by REITs generally do not qualify for the reduced tax rates available for some dividends.

 

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Qualified dividend income payable to U.S. investors that are individuals, trusts, and estates is subject to the reduced maximum tax rate applicable to long-term capital gains. Dividends payable by REITs, however, generally are not eligible for this reduced rate. For taxable years beginning after December 31, 2017 and before January 1, 2026, non-corporate taxpayers may deduct up to 20% of certain pass-through business income, including “qualified REIT dividends” (generally, dividends received by a REIT that are not designated as capital gain dividends or qualified income), subject to certain limitations, resulting in an effective maximum federal income tax rate of 29.6% on such income. In addition, individuals, trusts, and estates whose income exceeds certain thresholds are subject to 3.8% Medicare tax on dividends received by us. Although the reduced U.S. federal income tax rate applicable to qualified dividend income does not adversely affect the taxation of REITs or dividends payable by REITs, the more favorable rates applicable to regular corporate dividends could cause investors who are individuals, trusts, and estates to perceive investments in REITs to be relatively less attractive than investments in the stocks of non-REIT corporations that pay dividends, which could adversely affect the value of the interests of the REITs, including our interests. Tax rates could be changed in future legislation.

 

If a series were considered to actually or constructively pay a “preferential dividend” to certain of our investors, the series’ status as a REIT could be adversely affected.

 

In order to qualify as a REIT, a series must distribute annually to its investors at least 90% of the series’ REIT taxable income (which does not equal net income, as calculated in accordance with GAAP), determined without regard to the deduction for dividends paid and excluding net capital gain. In order for distributions to be counted as satisfying the annual distribution requirements for REITs, and to provide the series with a REIT-level tax deduction, the distributions must not be “preferential dividends.” A dividend is not a preferential dividend if the distribution is pro rata among all outstanding interests within a particular class, and in accordance with the preferences among different classes of stock as set forth in our organizational documents. Currently, there is uncertainty as to the IRS’s position regarding whether certain arrangements that REITs have with their investors could give rise to the inadvertent payment of a preferential dividend. While we believe that our operations have been structured in such a manner that we will not be treated as inadvertently paying preferential dividends, there is no de minimis exception with respect to preferential dividends and no assurances can be provided with respect to the application of the preferential dividend rule. Therefore, if the IRS were to take the position that a series inadvertently paid a preferential dividend, the series may be deemed either to (a) have distributed less than 100% of its REIT taxable income and be subject to tax on the undistributed portion, or (b) have distributed less than 90% of its REIT taxable income and the series status as a REIT could be terminated for the year in which such determination is made if the series were unable to cure such failure. If, however, a series qualifies as a “publicly offered REIT” (within the meaning of Section 562(c) of the Internal Revenue Code) in the future, the preferential dividend rules will cease to apply to us. We do not expect a series to become a publicly-offered REIT and, therefore, the preferential dividend rule will continue to be applicable. In addition, the IRS is authorized to provide alternative remedies to cure a failure to comply with the preferential dividend rules, but as of the date hereof, no such authorized procedures have been promulgated.

 

Complying with REIT requirements may force a series to forgo or liquidate attractive investments.
  
To qualify as a REIT, a series must ensure that it meets the REIT gross income tests annually and that at the end of each calendar quarter, at least 75% of the value of its assets consists of cash, cash items, government securities and qualified REIT real estate assets.  The remainder of a series’ investment in securities (other than government securities and qualified real estate assets) generally cannot include more than 10% of the outstanding voting securities of any one issuer or more than 10% of the total value of the outstanding securities of any one issuer.  In addition, in general, no more than 5% of the value of a series’ assets (other than government securities and qualified real estate assets) can consist of the securities of any one issuer, and no more than 20% of the value of a series’ total securities can be represented by securities of one or more taxable REIT subsidiaries.  If a series fails to comply with these requirements at the end of any calendar quarter, it must correct the failure within 30 days after the end of the calendar quarter or qualify for certain statutory relief provisions to avoid losing REIT qualification and suffering adverse tax consequences.  As a result, a series may be required to liquidate assets from its portfolio or not make otherwise attractive investments in order to maintain its qualification as a REIT.  These actions could have the effect of reducing a series’ income and amounts available for distribution to investors.
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Complying with REIT requirements may limit our ability to hedge our liabilities effectively and may cause us to incur tax liabilities.

 

The REIT provisions of the Internal Revenue Code may limit our ability to hedge our liabilities. Any income from a hedging transaction we enter into to manage risk of interest rate changes, price changes or currency fluctuations with respect to borrowings made or to be made to acquire or carry real estate assets, if properly identified under applicable Treasury Regulations, does not constitute “gross income” for purposes of the 75% or 95% gross income tests. To the extent that we enter into other types of hedging transactions, the income from those transactions will likely be treated as non-qualifying income for purposes of both of the gross income tests. As a result of these rules, we may need to limit our use of advantageous hedging techniques or implement those hedges through a TRS. This could increase the cost of our hedging activities because our TRSs would be subject to tax on gains or expose us to greater risks associated with changes in interest rates than we would otherwise want to bear. In addition, losses in a TRS generally will not provide any tax benefit, except for being carried forward against future taxable income of such TRS.

 

The ability of the manager to revoke the REIT qualification of a series without approval may subject a series to U.S. federal income tax and reduce distributions to our investors.

 

The operating agreement provides that the manager may revoke or otherwise terminate a series’ REIT election, without the approval of our investors, if it determines that it is no longer in a series’ best interest to continue to qualify as a REIT. While we intend for each series to elect and qualify to be taxed as a REIT, a series may not elect to be treated as a REIT or may terminate its REIT election if we determine that qualifying as a REIT is no longer in the best interests of our investors. If a series ceases to be a REIT, it would become subject to U.S. federal income tax on its taxable income and would no longer be required to distribute most of its taxable income to our investors, which may have adverse consequences on the total return to our investors and on the market price of the series’ interests.

We have not requested an opinion of counsel as to a series’ status as a REIT, which increases the risk that a series may not be appropriately structured and operated to qualify and maintain qualification as a REIT.
  
REITs engaging in a registered public offering must obtain a written opinion of counsel as to whether the REIT will qualify for taxation as a REIT under the Code and make that opinion available to the public as part of its registration process.  Opinions of counsel as to an entity’s eligibility to qualify as a REIT are not binding on the IRS and are not guarantees that such an entity will qualify and continue to qualify as a REIT.  In addition, legal counsel’s tax opinions are based upon the law existing and applicable as of the date of the opinions, all of which can change, either prospectively or retroactively.  However, accounting firms and law firms that render opinions to entities desiring to qualify as REITs would advise their clients as to the likelihood of meeting the qualification requirements and may suggest changes in an entity’s intended structure or intended method of operation to enhance the likelihood that an entity will meet the applicable requirements.  While we have consulted with our legal counsel, we are not required to request, and will not request, a written opinion that sets forth our legal counsel’s opinion on whether a series will be appropriately structured and operated to meet the complex requirements necessary to be taxed as a REIT.  Accordingly, no such opinion is available for you to review, and you face a greater risk that a series may not be appropriately structured and operated to qualify and maintain its qualification as a REIT. Moreover, to the extent that we were required to request a written opinion, while it is unclear what level of opinion a series would receive, we do not expect that we would receive a “will” level opinion on whether a series qualifies as a REIT.

 

Legislative or regulatory action with respect to tax laws and regulations could adversely affect our company and our investors.

 

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On December 22, 2017, H.R. 1, informally titled the Tax Cuts and Jobs Act, or the TCJA, was enacted.  The TCJA made major changes to the Internal Revenue Code, including a number of provisions of the Internal Revenue Code that affect the taxation of REITs and their investors. The long-term effect of the significant changes made by the TCJA remains uncertain, and additional administrative guidance will be required in order to fully evaluate the effect of many provisions. The effect of technical corrections with respect to the TCJA could have an adverse effect on our company and our investors. We are also subject to state and local tax laws and regulations. Changes in state and local tax laws or regulations may result in an increase in our tax liability. A shortfall in tax revenues for states and municipalities in which we operate may lead to an increase in the frequency and size of such changes. If such changes occur, we may be required to pay additional taxes on our assets or income. These increased costs could adversely affect our financial condition, results of operations and the amount of cash available for the payment of dividends.

 

Although REITs generally receive better tax treatment than entities taxed as regular corporations, it is possible that future legislation would result in a REIT having fewer tax advantages, and it could become more advantageous for a company that invests in real estate to elect to be treated for U.S. federal income tax purposes as a corporation. As a result, the operating agreement provides the manager with the power, under certain circumstances, to revoke or otherwise terminate a series’ REIT election and cause such series to be taxed as a regular corporation, without the vote of our investors. The manager could only cause such changes in a series’ tax treatment if it determines in good faith that such changes are in the best interest of the series’ investors.

 

In addition, in recent years, numerous legislative, judicial and administrative changes have been made to the federal income tax laws applicable to investments in REITs and similar entities. Additional changes to tax laws are likely to continue to occur in the future, and we cannot assure our investors that any such changes will not adversely affect an investment in our interests.
   
You are urged to consult with your tax advisor with respect to the impact of recent legislation on your investment in our interests and the status of legislative, regulatory or administrative developments and proposals and their potential effect on an investment in our interests.

 

The ownership restrictions of the Internal Revenue Code for REITs and the 9.8% ownership limit in the operating agreement may inhibit market activity in our interests and restrict our business combination opportunities

 

The Internal Revenue Code imposes certain limitations on the ownership of the stock of a REIT. For example, not more than 50% in value of our outstanding interests of capital stock may be owned, directly or indirectly, by five or fewer individuals (as defined in the Internal Revenue Code) during the last half of any taxable year. To protect a series’ REIT status, the operating agreement prohibits any holder from acquiring more than 9.8% (in value or number of interests, whichever is more restrictive) of the aggregate of the outstanding total capital stock of a series or more than 9.8% (in value or number of interests, whichever is more restrictive) of our interests or any class or series of the outstanding interests unless the manager determines that it is no longer in a series’ best interests to continue to qualify as a REIT or that compliance with the restriction is no longer required in order for the series to continue to so qualify as a REIT. The ownership limitation may limit the opportunity for investors to receive a premium for their interests that might otherwise exist if an investor were attempting to assemble a block of interests in excess of 9.8% of the outstanding interests or otherwise effect a change in control.

 

Potential characterization of distributions or gain on sale may be treated as unrelated business taxable income to tax-exempt investors.

 

If (a) we are a “pension-held REIT,” (b) a tax-exempt entity has incurred (or deemed to have incurred) debt to purchase or hold our interests, or (c) a holder of our interests is a certain type of tax-exempt entity, dividends on, and gains recognized on the sale of, our interests by such tax-exempt entity may be subject to U.S. federal income tax as unrelated business taxable income under the Internal Revenue Code.

 

Risks Related to Ownership of our Interests

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There is currently no public trading market for our securities. Our securities are also subject to significant restrictions on transferability.

 

There is currently no public trading market for any of our series interests, and an active market may not develop or be sustained. If an active public trading market for our securities does not develop or is not sustained, it may be difficult or impossible for you to resell your interests at any price. Even if a public market does develop, the market price could decline below the amount you paid for your interests.

 

The interests of each series are subject to restrictions on transferability. An interest holder may not transfer, assign or pledge its interests if the manager determines that such transfer, assignment or pledge would result in (a) there being more than 2,000 beneficial owners of the series or more than 500 beneficial owners of the series that are not “accredited investors,” (b) the assets of the series being deemed “plan assets” for purposes of ERISA, (c) such interest holder holding in excess of 9.8% of the series, (d) a change of US federal income tax treatment of our company or the series, or (e) our company, the series or the manager being subject to additional regulatory requirements.

 

Additionally, unless and until the interests of our company are listed or quoted for trading, there are restrictions on the holder’s ability to pledge or transfer the interests. There can be no assurance that we will, or will be able to, register the interests for resale and there can be no guarantee that a liquid market for the interests will develop. Therefore, investors may be required to hold their interests indefinitely.

 

If a market ever develops for our interests, the market price and trading volume may be volatile.

 

If a market develops for our interests, the market price of our interests could fluctuate significantly for many reasons, including reasons unrelated to our performance, the series properties or the series, such as reports by industry analysts, investor perceptions, or announcements by our competitors regarding their own performance, as well as general economic and industry conditions. For example, to the extent that other companies, whether large or small, within our industry experience declines in their share prices, the value of our interests may decline as well.

 

In addition, fluctuations in operating results of a particular series or the failure of operating results to meet the expectations of investors may negatively impact the price of our securities. Operating results may fluctuate in the future due to a variety of factors that could negatively affect revenues or expenses in any particular reporting period, including vulnerability of our business to a general economic downturn; changes in the laws that affect our operations; competition; compensation related expenses; application of accounting standards; seasonality; and our ability to obtain and maintain all necessary certifications or licenses to conduct our business.

 

There may be state law restrictions on an investor’s ability to sell the interests.

 

Each state has its own securities laws, often called “blue sky” laws, which (1) limit sales of securities to a state’s residents unless the securities are registered in that state or qualify for an exemption from registration and (2) govern the reporting requirements for broker-dealers and stockbrokers doing business directly or indirectly in the state. Before a security is sold in a state, there must be a registration in place to cover the transaction, or it must be exempt from registration. Also, Dalmore must be registered in that state. We do not know whether our securities will be registered, or exempt, under the laws of any states. A determination regarding registration will be made by broker-dealers, if any, who agree to serve as the market-makers for our interests. There may be significant state blue sky law restrictions on the ability of investors to sell, and on purchasers to buy, our interests. Investors should consider the resale market for our securities to be limited. Investors may be unable to resell their securities, or they may be unable to resell them without the significant expense of state registration or qualification. 

 

Investors’ limited voting rights restrict their ability to affect the operations of the company or a series. 

 

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Our manager has a unilateral ability to amend the operating agreement and the allocation policy in certain circumstances without the consent of the investors.  The investors only have limited voting rights in respect of the series in which they are invested. Investors will therefore be subject to any amendments the manager makes (if any) to the operating agreement and allocation policy and also any decision it takes in respect of our company and the applicable series, which the investors do not get a right to vote upon. Investors may not necessarily agree with such amendments or decisions and such amendments or decisions may not be in the best interests of all of the investors as a whole but only a limited number.

 

Furthermore, our manager can only be removed as manager of our company and each series of interests in a very limited circumstance, following a non-appealable judgment of a court of competent jurisdiction to have committed fraud in connection with our company or a series of interests. Investors would therefore not be able to remove the manager merely because they did not agree, for example, with how the manager was operating a series property.

 

This offering is being conducted on a “best efforts” basis and we may not be able to execute our growth strategy if we are unable to raise this capital.

 

We are offering the interests on a “best efforts” basis, and we can give no assurance that all of the offered interests will be sold. If you invest in our interests and more than the minimum number of offered interests are sold, but less than all of the offered interests are sold, the risk of losing your entire investment will be increased. If substantially less than the maximum amount of interests offered are sold, we may be unable to fund all the intended uses described in this offering circular from the net proceeds anticipated from this offering without obtaining funds from alternative sources or using working capital that we generate. Alternative sources of funding may not be available to us at what we consider to be a reasonable cost, and the working capital generated by us may not be sufficient to fund any uses not financed by offering net proceeds.

 

The offering price for the interests determined by us may not necessarily bear any relationship to established valuation criteria such as earnings, book value or assets that may be agreed to between purchasers and sellers in private transactions or that may prevail in the market if and when our interests can be traded publicly.

 

The price of the interests is a derivative result of the cost that a series is expected to incur in acquiring a property.  These prices do not necessarily accurately reflect the actual value of the interests or the price that may be realized upon disposition of the interests.

 

You will not receive interest on funds held in the Arrived Homes Wallet. The Arrived Homes Wallet is subject to risks relating to third-party banks and third-party computer hardware and software.  
  
Funds submitted into the Arrived Homes Wallet may earn interest at the prevailing applicable interest rate; however, any such interest earned will be retained by the manager and will not be paid to investors. Funds submitted into the Arrived Homes Wallet will be maintained in an account in the name of Wells Fargo FBO Arrived Subscribers at Wells Fargo Bank, N.A. We and our wallet provider, Modern Treasury, will maintain a ledger such that the balance attributable to each individual will be viewable in the Arrived Homes Wallet on the platform. The Arrived Homes Wallet is subject to risks that third-party and FDIC-insured depository institutions may not be able to process our transactions. See “We and the Arrived Platform rely on third-party banks and third-party computer hardware and software. If we are unable to continue utilizing these services or products, our business and ability to operate the corresponding properties may be adversely affected.”

 

Any funds held in the Arrived Homes Wallet are FDIC insured, but such funds will be aggregated with any funds held with Wells Fargo Bank, N.A.  
  
Funds stored in the Arrived Homes Wallet are FDIC insured but will be aggregated with any funds held with Wells Fargo Bank, N.A. If an investor's aggregate funds held with Wells Fargo Bank, N.A., including those funds contained in the Arrived Homes Wallet exceed $250,000, such funds will not have the protection of FDIC insurance. 

 

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Any dispute in relation to the operating agreement is subject to the exclusive jurisdiction of the Court of Chancery of the State of Delaware, except where federal law requires that certain claims be brought in federal courts.  The operating agreement, to the fullest extent permitted by applicable law, provides for investors to waive their right to a jury trial.

 

Each investor will covenant and agree not to bring any claim in any venue other than the Court of Chancery of the State of Delaware, or if required by federal law, a federal court of the United States, as in the case of claims brought under the Exchange Act. Section 27 of the Exchange Act creates exclusive federal jurisdiction over all suits brought to enforce any duty or liability created by the Exchange Act or the rules and regulations thereunder. As a result, the exclusive forum provision will not apply to suits brought to enforce any duty or liability created by the Exchange Act or any other claim for which the federal courts have exclusive jurisdiction. Furthermore, Section 22 of the Securities Act creates concurrent jurisdiction for federal and state courts over all suits brought to enforce any duty or liability created by the Securities Act or the rules and regulations thereunder. As a result, the exclusive forum provisions will not apply to suits brought to enforce any duty or liability created by the Securities Act or any other claim for which the federal and state courts have concurrent jurisdiction, and investors will not be deemed to have waived our compliance with the federal securities laws and the rules and regulations thereunder.

 

If an interest holder were to bring a claim against our company or the manager pursuant to the operating agreement and such claim was governed by state law, it would have to bring such claim in the Delaware Court of Chancery. The operating agreement, to the fullest extent permitted by applicable law and subject to limited exceptions, provides for investors to consent to exclusive jurisdiction to Delaware Court of Chancery and for a waiver of the right to a trial by jury, if such waiver is allowed by the court where the claim is brought.

 

If we opposed a jury trial demand based on the waiver, the court would determine whether the waiver was enforceable based on the facts and circumstances of that case in accordance with the applicable state and federal law. To our knowledge, the enforceability of a contractual pre-dispute jury trial waiver in connection with claims arising under the federal securities laws has not been finally adjudicated by the United States Supreme Court. However, we believe that a contractual pre-dispute jury trial waiver provision is generally enforceable, including under the laws of the Delaware, which govern the operating agreement, by a federal or state court in the State of Delaware, which has exclusive jurisdiction over matters arising under the operating agreement. In determining whether to enforce a contractual pre-dispute jury trial waiver provision, courts will generally consider whether a party knowingly, intelligently and voluntarily waived the right to a jury trial.

 

We believe that this is the case with respect to the operating agreement and our interests. It is advisable that you consult legal counsel regarding the jury waiver provision before entering into the operating agreement. Nevertheless, if this jury trial waiver provision is not permitted by applicable law, an action could proceed under the terms of the operating agreement with a jury trial. No condition, stipulation or provision of the operating agreement or our interests serves as a waiver by any investor or beneficial owner of our interests or by us of compliance with the U.S. federal securities laws and the rules and regulations promulgated thereunder. Additionally, our company does not believe that claims under the federal securities laws shall be subject to the jury trial waiver provision, and our company believes that the provision does not impact the rights of any investor or beneficial owner of our interests to bring claims under the federal securities laws or the rules and regulations thereunder.

 

These provisions may have the effect of limiting the ability of investors to bring a legal claim against us due to geographic limitations and may limit an investor’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us. Furthermore, waiver of a trial by jury may disadvantage an investor to the extent a judge might be less likely than a jury to resolve an action in the investor’s favor. Further, if a court were to find this exclusive forum provision inapplicable to, or unenforceable in respect of, an action or proceeding against us, then we may incur additional costs associated with resolving these matters in other jurisdictions, which could materially and adversely affect our business and financial condition.

 

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DILUTION

 

Dilution means a reduction in value, control or earnings of the interests an investor owns. There will be no dilution to any investors associated with our series offerings. However, from time to time, additional interests in a series offered hereby may be issued in order to raise capital to cover such series’ ongoing Operating Expenses, which may result in dilution of the interests of the then-current investors. See “Description of Business-Operating Policies-Equity Capital Policies” for further details.

 

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DESCRIPTION OF BUSINESS

 

Company Overview – Our Mission

 

Arrived Homes 3, LLC, a Delaware series limited liability company, was formed in January 2023 to permit public investment in specific single-family rental homes. We believe people should have the freedom to move to pursue new opportunities in their lives while still having access to the wealth creation that long-term home ownership and real estate investment can provide. To support this idea, we are building what we believe to be a new model for home ownership and real estate investment that doesn’t lock people into a single home or city. We believe in passive income, conservative debt, freedom to move, diversification, and aligned incentives.

 

Arrived is a marketplace for investing in homes. We buy single family homes, lease them, divide them into multiple interests, and offer them as investments on a per interest basis through our web-based platform. Investors can manage their risk by spreading their investments across a portfolio of homes, they can invest in real estate without needing to apply for mortgages or take on personal debt, and they can move to new homes or cities and continue holding their Arrived investments without having to worry about selling homes they’re invested in.

 

Arrived does all of the work of sourcing, analyzing, maintaining, and managing all of the homes that we acquire. We analyze every home investment across several financial, market, and demographic characteristics to support our acquisition decision-making. Every investment we make is an investment in the communities in which Arrived operates, alongside other like-minded individuals. As our community network grows, so does our access to investment and housing opportunities.

 

Arrived rents the homes we acquire to tenants who can also invest through the same process as any other member of the Arrived platform, becoming part owners of the homes they’re living in at that time. By investing together, we align incentives towards creating value for everyone.

 

Our Series LLC Structure

 

Each single family rental home that we acquire will be owned by a separate series of our company that we will establish to acquire that home.  Each series may hold the specific property that it acquires in a wholly-owned subsidiary, which would be a limited liability company organized under laws of the state in which the series property is located. 

 

As a Delaware series limited liability company, the debts, liabilities, obligations and expenses incurred, contracted for or otherwise existing with respect to a particular series are segregated and enforceable only against the assets of such series, as provided under Delaware law.  We intend for each series to elect and qualify to be taxed as a separate real estate investment trust, or REIT, for U.S. federal income tax purposes, commencing with the taxable year ending after the completion of the initial public offering of interests of such series.

 

Our company’s core business is the identification, acquisition, marketing and management of individual single family rental homes for the benefit of our investors. Each series is intended to own a single property.

 

Investment Objectives

 

Our investment objectives are: 

 

  Consistent cash flow;

 

  Long term capital appreciation with moderate leverage;

 

  Favorable tax treatment of REIT income and long term capital gains; and

 

  Capital preservation.
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We cannot assure you that we will attain these objectives or that the value of our assets will not decrease. 

 

Our Investment Criteria

 

Our home acquisition investments are evaluated against the following primary characteristics:

 

  Capitalization rates greater than 5%. For this purpose, the capitalization rate reflects a series property’s annual rental income minus property management fees, local real estate taxes, property insurance, maintenance expenses, and marketing incentives, divided by the purchase price of the property;

 

  Homes with a minimum of three (3) bedroom and two (2) bathrooms;

 

  Homes less than 30 years old;

 

  Homes with a price range of $200,000 to $400,000 and a repair/improvement budget requirement of less than 20% of the home purchase price; and

 

  Neighborhoods with median incomes that exceed the metropolitan statistical area, or MSA, median.

 

Our Investment Process

 

Our investment process leverages our network of renter demand, experienced team members, and data analysis to make our investment decisions:

 

  Sourcing: Arrived will use an in-house acquisition team (using industry leading analysis and screening tools) in collaboration with local real estate professionals to find and source investment opportunities. The opportunities may include individual homes listed on the MLS, bulk rental home portfolios, BFR (built-for-rent) communities, and off-market deals sourced by our staff and from leads generated from our member network.

 

  Due Diligence: Arrived evaluates potential investments against our stated investment criteria. Once a geographic market is selected, our due diligence will focus on the sub-market and the property itself. Value analysis will include projected rental rates and home values, relying on a combination of first-party data, automated valuation models, or AVMs, and third party independent appraisals. Property level analysis will look at standard risk factors including condition of title, structural defects in the home, environmental issues, and other hazards such as floods and earthquakes.

 

  Investment Committee: Once our acquisition team recommends a home purchase, the investment committee will convene to review due diligence materials and issue a go/no-go decision.

 

  Home Purchase: A home will be purchased either by the manager or an affiliate of the manager and then resold to a particular series or a wholly-owned subsidiary of the series, or purchased directly by a series from a third-party seller, in accordance with the acquisition mechanics set forth below. Following acquisition of a property by a series, the property will be renovated, to the extent necessary, and then leased to a quality tenant on a 12 to 24 month lease. If a series property is renovated prior to the closing of the relevant series offering, the funds required for renovations will be forwarded to the series by the manager and repaid out of offering proceeds.

 

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  Ongoing Management: Arrived will partner with one or more third party independent property management firms in each of our markets. Arrived will place an initial tenant in a home from our member network and will assist with future tenant placements. The property management firm will maintain books and records, inspect each home and ensure that it is properly maintained, handle maintenance requests, and be responsible for landlord/tenant compliance. We intend that our preferred property management firms will utilize modern tech-enabled property management platforms with digital payment and communication features.

 

Our Manager

 

We are managed by Arrived Holdings, Inc., a Delaware corporation. Pursuant to the terms of our operating agreement, the manager will provide certain management and advisory services to us and to each of our series and their subsidiaries, if any, as well as a management team and appropriate support personnel.  The manager is a technology-enabled asset management company that operates a web-based investment platform, the Arrived platform, used by our company for the offer and sale of interests in the series of our company.

 

The nature of our business to be conducted or promoted by us must at all times be to engage in any lawful act or activity for which LLCs may be organized under the Delaware Limited Liability Company Act.
 

Investment Strategy – Our Market Opportunity

 

Our investment strategy is to acquire, invest in, manage, operate, selectively leverage and sell single family homes located in vibrant, growing cities across America. We believe that these markets offer investors a blend of attractive capitalization rates and a strong prospect for long term property value appreciation.

 

Market Selection

 

We intend to focus our business efforts on the top 100 MSAs (metropolitan statistical areas with populations greater than 500,000) which exhibit the following characteristics:

 

  Sufficient inventory to make it feasible to achieve scale in the local market (100 – 500 homes);

 

  Job and income growth forecasts of 3% or greater;

 

  Affordability with gross rent multiplier below 12. For this purpose, a gross rent multiplier (GRM) is the ratio of the price of the single family home purchased to its annual rental income before accounting for expenses such as property taxes, insurance, and utilities; GRM is the number of years the property would take to pay for itself in gross received rent;

 

  Large university and skilled workforce;

 

  Popular with millennials; and

 

  Favorable competitive landscape with respect to other institutional single family residence buyers.

 

For a brief overview of the particular geographic market in which a series property is located, see the individual series property listings in the section titled “The Series Properties Being Offered” below.

 

We focus on acquiring properties we believe (1) are likely to generate stable cash flows in the long term and (2) have significant possibilities for long-term capital appreciation, such as those located in neighborhoods with what we see as high growth potential and those available from sellers who are distressed or face time-sensitive deadlines. 

 

We may enter into one or more joint ventures, tenant-in-common investments or other co-ownership arrangements for the acquisition, development or improvement of properties with third parties or affiliates of the manager, including present and future real estate investment offerings sponsored by affiliates of the manager. 

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Investment Decisions and Asset Management 

 

Within our investment policies and objectives, the manager will have discretion with respect to the selection of specific investments and the purchase and sale of our properties. We believe that successful real estate investment requires the implementation of strategies that permit favorable purchases, effective asset management and timely disposition of those assets. As such, we have developed a disciplined investment approach that combines the experience of our manager with a structure that emphasizes thorough market research, stringent underwriting standards and an extensive down-side analysis of the risks of each investment. The approach also includes active and aggressive management of each asset acquired.

 

To execute our disciplined investment approach, the manager will take responsibility for the business plan of each investment. The following practices summarize our investment approach:

 

  Local Market Research – Our manager will extensively research the acquisition and underwriting of each transaction, utilizing both real time market data and the transactional knowledge and experience of our network of professionals and in market relationships.

 

  Underwriting Discipline – Our manager will follow a tightly controlled and managed process to examine all elements of a potential investment, including, with respect to real property, its location, income-producing capacity, prospects for long-range appreciation, tax considerations and liquidity.

 

  Risk Management – Risk management will be a fundamental principle in the management of each of our properties. Operating or performance risks arise at the investment level and often require real estate operating experience to cure. Our manager will review the operating performance of investments against projections and provide the oversight necessary to detect and resolve issues as they arise.

 

  Asset Management – Prior to the purchase of a property, our manager will develop a property business strategy which will be customized based on the acquisition and underwriting data. This is a forecast of the action items to be taken and the capital needed to achieve the anticipated returns. The manager will review asset business strategies regularly to anticipate changes or opportunities in the market during a given phase of a real estate cycle.

 

Investments in Real Property

 

Our investment in real estate generally will take the form of holding fee title or a long-term leasehold estate. We will acquire such interests either directly or indirectly through limited liability companies or through investments in joint ventures, partnerships, co-tenancies or other co-ownership arrangements with third parties, including developers of the properties, or with affiliates of the manager. In addition, we may purchase properties and lease them back to the sellers of such properties. Although we will use our best efforts to structure any such sale-leaseback transaction such that the lease will be characterized as a “true lease” so that we will be treated as the owner of the property for federal income tax purposes, the Internal Revenue Service could challenge such characterization. If any such sale-leaseback transaction is recharacterized as a financing transaction for U.S. federal income tax purposes, deductions for depreciation and cost recovery relating to such property would be disallowed. 

 

Our obligation to purchase any property generally will be conditioned upon the delivery and verification of certain documents from the seller or developer, including, where appropriate:

 

  plans and specifications;

 

  evidence of marketable title subject to such liens and encumbrances as are acceptable to the manager;

 

  auditable financial statements covering recent operations of properties having operating histories; and

 

  title and liability insurance policies. 
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We may seek to enter into arrangements with the seller or developer of a property whereby the seller or developer agrees that, if during a stated period the property does not generate a specified cash flow, the seller or developer will pay in cash to us a sum necessary to reach the specified cash flow level, subject in some cases to negotiated dollar limitations. In determining whether to purchase a particular property, we may, in accordance with customary practices, obtain an option on such property. The amount paid for an option, if any, is normally surrendered if the property is not purchased and is normally credited against the purchase price if the property is purchased. The terms and conditions of any apartment lease that we enter into with our residents may vary substantially; however, we expect that a majority of our leases will be standardized leases customarily used between landlords and residents for residential properties. Such standardized leases generally have terms of one year or less. All prospective residents for our residential properties will be required to submit a credit application.

 

In purchasing, leasing and developing properties, we will be subject to risks generally incident to the ownership of real estate. For example, certain losses are not insurable and may only be insured subject to limitations. Insurance coverage may also vary based on the specific property, geography and market covered. Our insurance coverage generally varies based on replacement cost (estimated with a cost to square foot analysis based on the market and finish level). Although we also maintain an “all-perils policy” (with some standard exclusions) for each series property which seeks to provide insurance coverage for the properties at their full value, there is no guarantee that such coverage will actually be sufficient or cover all costs and damages in the case of any loss.

 

Investment Process

 

The manager has the authority to make all the decisions regarding our investments consistent with the investment objectives and leverage policies approved by the manager and subject to the limitations in the operating agreement.

 

The manager will focus on the sourcing, acquisition and management of residential properties. It will source our investments from former and current financing and investment partners, third-party intermediaries, competitors looking to share risk and investment, and securitization or lending departments of major financial institutions.

 

In selecting investments for us, the manager will utilize the manager’s investment and underwriting process, which focuses on ensuring that each prospective investment is being evaluated appropriately. In addition to the specific investment criteria listed above, our manager will consider the following factors when evaluating prospective investment opportunities: 

 

  macroeconomic conditions that may influence operating performance;

 

  real estate market factors that may influence real estate valuations, real estate financing or the economic performance of real estate generally;

 

  fundamental analysis of the real estate, including tenant rosters, lease terms, zoning, operating costs and the asset’s overall competitive position in its market;

 

  real estate and leasing market conditions affecting the real estate;

 

  the cash flow in place and projected to be in place over the expected hold period of the real estate;

 

  the appropriateness of estimated costs and timing associated with capital improvements of the real estate;

 

  a valuation of the investment, investment basis relative to its value and the ability to liquidate an investment through a sale or refinancing of the real estate;

 

  review of third-party reports, including appraisals, engineering and environmental reports;

 

  physical inspections of the real estate and analysis of markets; and
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  the overall structure of the investment and rights in the transaction documentation. 

 

If a potential investment meets the manager’s underwriting criteria, the manager will review the proposed transaction structure, including, with respect to joint ventures, distribution and waterfall criteria, governance and control rights, buy-sell provisions and recourse provisions. The manager will evaluate our position within the overall capital structure and our rights in relation to other partners or capital tranches. The manager will analyze each potential investment’s risk-return profile and review financing sources, if applicable, to ensure that the investment fits within the parameters of financing facilities and to ensure performance of the real estate asset. 

 

Leverage Policy

 

We may employ leverage to enhance total returns to our investors through a combination of senior financing on our real estate acquisitions, secured facilities, and capital markets financing transactions. We will seek to secure conservatively structured leverage that is long-term, non-recourse, non-mark-to-market financing to the extent obtainable on a cost effective basis. To the extent leverage is employed it may come either in the form of government-sponsored programs or other long-term, non-recourse, non-mark-to-market financing. The manager may from time to time modify our leverage policy in its discretion. However, it is our policy to not borrow more than 69% of the greater of cost (before deducting depreciation or other non-cash reserves) or fair market value of our assets. We cannot exceed the leverage limit of our leverage policy unless any excess in borrowing over such level is approved by the manager. To the extent a series does not employ leverage to fund the initial purchase of an asset, the series may subsequently determine to obtain financing for the asset in accordance with this leverage policy.In such case, unless the financing (or any other refinancing) proceeds are needed, in the manager’s discretion, to fund the operations of an asset or reserves, the manager may determine to distribute all or a portion of such proceeds to investors.

 

Acquisition Mechanics

 

Typically, each series will acquire its series property prior to the commencement or closing of that series’ offering. Each series property will be fully described in the offering circular as it may be amended to include new series offerings. In each such offering circular, information relating to the series property being offered, such as the description and specifications of the series property, the purchase price of the series property and the relevant terms of purchase, will be disclosed.

 

It is not anticipated that a series will own any assets other than its series property, plus cash reserves for maintenance, insurance and other expenses pertaining to the series property and amounts earned by the series from the monetization of the series property, if any.  Each series may hold the specific property that it acquires in a wholly-owned subsidiary which would be a limited liability company organized under laws of the state in which the series property is located. 

 

A series may acquire its property either from an unaffiliated third party or from an affiliate. The differences in these acquisition methods are described below: 

 

  1. Acquisition of a Series Property from an Unaffiliated Third-Party Seller

 

If a new property is to be acquired for a new series prior to the establishment of that series, the manager will enter into a purchase and sale agreement with the third-party seller to acquire the property on behalf of the new series. The manager will negotiate with the third-party seller on behalf of the to-be-organized series the purchase price for the new property and related purchase terms and conditions which will be specified in an offer to purchase real estate agreement, or purchase and sale agreement, by and between the manager and the property seller, a form of which has been filed as an exhibit to the offering statement of which this offering circular is a part. Once the new series is established, the manager will either assign the purchase and sale agreement to that series or the purchase and sale agreement will be re-executed with the new series as the buying party.

 

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Typically, a series will hold its property in a wholly owned limited liability company subsidiary organized in the state where the property is located.

 

Purchase price funds to acquire a new property from a third party will either be all cash provided by the proceeds of an offering or some combination of mortgage proceeds and cash. If a property is purchased entirely with cash without any financing, the series may later obtain mortgage financing for the property, to the extent such financing is available at favorable rates, and the manager in its discretion may determine to distribute certain proceeds from such financing to investors as more fully discussed under “Leverage Policy”, above. The funding and closing of the property acquisition may take place prior to the beginning of the series offering, during the offering or at the time of closing of the offering. If the property acquisition closing takes place prior to the closing of the series offering, the cash component of the property purchase price will be provided by the manager as a loan to the series for payment to the third-party seller. In turn, the series will issue to the manager a promissory note in the amount of the manager’s loan. In addition, if a mortgage is not able to be obtained, or obtained at favorable rates, from a third-party lender, the manager or an affiliate may provide such financing at a reasonable market interest rate. The proceeds of the new series offering, net of sales commissions, if any, will be used to repay the outstanding balance, plus accrued but unpaid interest, on the promissory note (and, if applicable, mortgage loan) issued to the manager.  The series will also pay the manager a sourcing fee as indicated below in the use of proceeds table for the series.   If by the termination date of the offering the series does not raise sufficient funds in the offering to repay the manager the outstanding principal balance on the promissory note (and, if applicable, mortgage loan), (i) the available net proceeds of the offering will be used to pay down the promissory note and/or the mortgage loan to the extent possible and (ii) any outstanding balance on the promissory note will be converted into interests in the series and issued to the manager. Such interests will be valued at the same price as offered to investors in the series offering. 

 

  2. Acquisition of a Series Property from the Manager or an Affiliate of the Manager

 

If the entity selling the property to a series is the manager or an affiliate of the manager who had previously purchased the property from a third-party seller, the series will purchase the property (or a 100% interest in the LLC that may own the property) at a purchase price equal to the price the manager or affiliate actually paid for the property (inclusive of acquisition and closing costs).  The series will also pay the manager (or the affiliate of the manager) the sourcing fee as indicated in the use of proceeds table for the particular offering. The series will purchase the property through the issuance to the manager (or the affiliate of the manager) of a promissory note in the full amount of the purchase price of the series property inclusive of acquisition and closing costs. Typically, a series will hold its property in a wholly owned limited liability company subsidiary organized in the state where the property is located. 

 

The series will repay the promissory note, along with accrued interest at a to-be-determined annual interest rate, with net proceeds from the series offering. If the property is purchased without any mortgage financing (in which case the note would reflect an all-cash amount required to acquire the property), the series may later obtain mortgage financing for the property, to the extent such financing is available at favorable rates, and the manager in its discretion may determine to distribute certain proceeds from such financing to investors as more fully discussed under “Leverage Policy”, above. Prior to the repayment of the note, the manager (or the affiliate of the manager) will retain all rental income derived from the series property, net of concessions, taxes, insurance, HOA dues and costs of repair. If the series does not raise sufficient funds in its offering to fully repay the promissory note within the 12 months following the date of the offering circular amendment relating to that series, the balance due on the promissory note, along with accrued but unpaid interest, will be converted into interests in the series at the series offering price.

 

The manager reserves the right to adjust the acquisition mechanics described above in its sole discretion. To the extent that the manager does so adjust the acquisition mechanics in any material way, we will file a supplement to this offering circular to reflect such material adjustment.

 

Operating Policies

 

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Credit Risk Management. We may be exposed to various levels of credit and special hazard risk depending on the nature of our assets. The manager and its executive officers will review and monitor credit risk and other risks of loss associated with each investment. The manager will monitor the overall credit risk and levels of provision for loss.

 

Interest Rate Risk Management. We will follow an interest rate risk management policy intended to mitigate the negative effects of major interest rate changes. We intend to minimize our interest rate risk from borrowings by attempting to “match-fund,” which means the manager will seek to structure the key terms of our borrowings to generally correspond with the expected holding period of our assets.

 

Equity Capital Policies. Under the operating agreement, we have the authority to issue an unlimited number of additional interests or other securities. After your purchase in any series offering, the manager may elect to: (i) sell additional securities in future private offerings, or (ii) issue additional securities in public offerings. To the extent we issue additional equity interests after your purchase in an offering, your percentage ownership interest in us will be diluted. In addition, depending upon the terms and pricing of any additional offerings and the value of our investments, you may also experience dilution in the book value and fair value of your interests.

 

Additional Borrowings. We expect each series may seek, as applicable, to finance or refinance any outstanding indebtedness with an additional mortgage or other debt financing, including with either an affiliate or a third party. We expect that any third-party mortgage and/or other debt instruments that a series, or the Company on behalf of a series, enters into in connection with a financing or refinancing of a property will be secured by a security interest in the title of such property and any other assets of the series.
    
See “Use of Proceeds to Issuer” for more information.
 

Disposition Policies

 

We intend to hold and manage the properties we acquire for a period of five to seven years. As each of our properties reaches what we believe to be its optimum value, we will consider disposing of the property. The determination of when a particular property should be sold or otherwise disposed of will be made after consideration of relevant factors, including prevailing and projected economic conditions, whether the value of the property is anticipated to appreciate or decline substantially, and how any existing leases on a property may impact the potential sales price. The manager may determine that it is in the best interests of shareholders to sell a property earlier than five years or to hold a property for more than seven years. Additionally, any sale of a property will be subject to lessee rights and we would attempt to time property sales with lessee rights in mind, either by timing sales with anticipated lease terminations or by assigning an existing lease to the property buyer where allowed under applicable laws.

 

When we determine to sell a particular property, we will seek to achieve a selling price that maximizes the capital appreciation for investors based on then-current market conditions. We cannot assure you that this objective will be realized.

 

Following the sale of a property, the manager will distribute the proceeds of such sale, net of the property disposition fee as described below, to the interest holders of the applicable series (after payment of any accrued liabilities or debt on the property or of the series at that time).

 

Property Disposition Fee

 

Upon the disposition and sale of a series property, each series will be charged a market rate property disposition fee that will cover property sale expenses such as brokerage commissions, and title, escrow and closing costs. It is expected that this disposition fee charged to a series will range from six to seven percent of the property sale price. To the extent that the actual property disposition fees are less than the amount charged to the series, the manager will receive the difference as income.

 

Description of the Property Management Agreement

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The Company will appoint the manager or a third-party property management company to serve as property manager to manage the underlying property of each series pursuant to a series specific property management agreement.

 

The services provided by the property manager will include:

 

  Collecting rent and maintaining books and records;

 

  Ensuring compliance with local landlord/tenant and other applicable laws;

 

  Routine property maintenance and responding to tenant maintenance requests;

 

  Handling tenant on-boarding (move-in) and move-out; and

 

  Investigating, selecting, and, on behalf of the applicable series, engaging and conducting business with such persons as the property manager deems necessary to ensure the proper performance of its obligations under the property management agreement, including but not limited to consultants, insurers, insurance agents, maintenance providers, bookkeepers and accountants and any and all persons acting in any other capacity deemed by the property manager necessary or desirable for the performance of any of the services under the property management agreement.

 

Each property management agreement will terminate on the earlier of: (i) the manager’s discretion to terminate a property management agreement at pre-determined renewal periods or by paying a termination fee, (ii) after the date on which the relevant series property has been liquidated and the obligations connected to the series property (including contingent obligations) have been terminated, (iii) the removal of the manager as managing member of our company and thus of all series (if the property manager is the manager), (iv) upon notice by one party to the other party of a party’s material breach of a property management agreement or (v) such other date as agreed between the parties to the property management agreement.

 

Each series will indemnify the property manager out of its assets against all liabilities and losses (including amounts paid in respect of judgments, fines, penalties or settlement of litigation, including legal fees and expenses) to which it becomes subject by virtue of serving as property manager under the respective property management agreements with respect to any act or omission that has not been determined by a final, non-appealable decision of a court, arbitrator or other tribunal of competent jurisdiction to constitute fraud, willful misconduct or gross negligence.

 

Currently, we intend to enter into a property management agreement on behalf of each series with a third-party property manager. However, we reserve the right to change property managers at any time.

 

Property Management Fee

 

The company will appoint an affiliate of the manager or a third-party property management company to serve as property manager to manage the property of each series pursuant to a property management agreement. The fee arrangements for each third-party property management company are set forth below:
  
Marketplace Homes
  
As compensation for the services provided by the property manager, each series will be charged a property management fee of $70 on a monthly basis and paid to the property manager pursuant to the property management agreement.
  
Mynd
  
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As compensation for the services provided by the property manager, each series will be charged a property management fee equal to six percent (6%) of all rents and fees as remitted to the series or a minimum property management fee of $84 on a monthly basis and paid to the property manager pursuant to the property management agreement.
  
Streetlane (formerly Great Jones)
  
As compensation for the services provided by the property manager, each series will be charged a property management fee equal to eight percent (8%) of all rents and fees as remitted to the series or a minimum property management fee of $99 on a monthly basis and paid to the property manager pursuant to the property management agreement. As of October 2023, all properties formerly managed by Great Jones are now managed by Streetlane as a result of a merger between Streetlane and Great Jones. All property management agreements between the relevant series and Great Jones remain in full force and effect.
    
Property Disposition Fee
  
Upon the disposition and sale of a series property, each series will be charged a market rate property disposition fee that will cover property sale expenses such as brokerage commissions, and title escrow and closing costs. It is expected that this disposition fee charged to a series will range from six percent (6%) to seven percent (7%) of the property sale price. To the extent that the actual property disposition fees are less than the amount charged to the series, the manager will receive the difference as income.
  
Following the sale of a property, the manager will distribute the proceeds of such sale, net of the property disposition fee, to the interest holders of the applicable series (after payment of any accrued liabilities or debt on the property or of the series at that time).
   

Asset Management Fee

 

Each series will pay the manager an annual asset management fee equal to six tenths of a percent (0.6%) of the purchase price of the series property for that series. This fee will be paid out of the net operating rental income of a series on a quarterly basis.

 

Operating Expenses

 

Each series of our company will be responsible for the following costs and expenses attributable to the activities of our company related to such series (we refer to these as Operating Expenses):

 

  any and all fees, costs and expenses incurred in connection with the management of a series property, including Home Ownership Association (HOA) fees, income taxes, marketing, security and maintenance;

 

  any fees, costs and expenses incurred in connection with preparing any reports and accounts of each series, including any blue sky filings required in order for interests in a series to be made available to investors in certain states and any annual audit of the accounts of such series (if applicable) and any reports to be filed with the Commission including periodic reports on Forms 1-K, 1-SA and 1-U;

 

  any and all insurance premiums or expenses, including directors and officers insurance of the directors and officers of the manager or a property manager, in connection with the series property;

 

  any withholding or transfer taxes imposed on our company or a series or any of the members as a result of its or their earnings, investments or withdrawals;

 

  any governmental fees imposed on the capital of our company or a series or incurred in connection with compliance with applicable regulatory requirements;

 

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  any legal fees and costs (including settlement costs) arising in connection with any litigation or regulatory investigation instituted against our company, a series or a property manager in connection with the affairs of our company or a series;

 

  the fees and expenses of any administrator, if any, engaged to provide administrative services to our company or a series; 

 

  any fees, costs and expenses of a third-party registrar and transfer agent appointed by the manager in connection with a series;

 

  the cost of the audit of our company’s annual financial statements and the preparation of its tax returns and circulation of reports to investors;

 

  the cost of any audit of a series annual financial statements and the fees, costs and expenses incurred in connection with making of any tax filings on behalf of a series and circulation of reports to investors;

 

  any indemnification payments to be made pursuant to the requirements of the operating agreement;

 

  the fees and expenses of our company’s or a series’ counsel in connection with advice directly relating to our company’s or a series’ legal affairs;

 

  the costs of any other outside appraisers, valuation firms, accountants, attorneys or other experts or consultants engaged by the manager in connection with the operations of our company or a series; and

 

  any similar expenses that may be determined to be Operating Expenses, as determined by the manager in its reasonable discretion.

 

The manager will bear its own expenses of an ordinary nature, including all costs and expenses on account of rent, supplies, secretarial expenses, stationery, charges for furniture, fixtures and equipment, payroll taxes, remuneration and expenses paid to employees and utilities expenditures.

 

If the Operating Expenses exceed the amount of revenues generated from a series property and cannot be covered by any Operating Expense reserves on the balance sheet of such series property, the manager may (a) pay such Operating Expenses and not seek reimbursement, (b) loan the amount of the Operating Expenses to the applicable series, on which the manager may impose a reasonable rate of interest, and be entitled to reimbursement of such amount from future revenues generated by such series property (which we refer to as Operating Expenses Reimbursement Obligation(s)), and/or (c) cause additional interests to be issued in the such series in order to cover such additional amounts.

 

Allocations of Expenses

 

To the extent relevant, Offering Expenses, Acquisition Expenses, Operating Expenses, revenue generated from series properties and any indemnification payments made by the manager will be allocated among the various series interests in accordance with the manager’s allocation policy set forth below. The allocation policy requires the manager to allocate items that are allocable to a specific series to be borne by, or distributed to (as applicable), the applicable series.  If, however, an item is not allocable to a specific series but to our company in general, it will be allocated pro rata based on the value of the series properties or the number of properties, as reasonably determined by the manager or as otherwise set forth in the allocation policy. By way of example, as of the date hereof it is anticipated that revenues and expenses will be allocated as follows:

 

Revenue or  Expense Item   Details   Allocation Policy (if revenue or expense is not clearly allocable to a specific series property)
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Revenue   Each of the series will have monthly rental income from the series property.   Allocable directly to the applicable series property
Acquisition Expenses   Appraisal and valuation fees (if incurred pre-closing)   Allocable directly to the applicable series property
    Appraisal and valuation fees (if incurred post-closing)   Allocable directly to the applicable series property
    Pre-purchase inspection   Allocable directly to the applicable series property
    Closing costs   Allocable directly to the applicable series property
    Interest expense, if any, when an underlying series property is purchased by a series through a loan prior to the closing of a series offering   Allocable directly to the applicable series property
Offering Expenses   Legal expenses related to the preparation of regulatory paperwork (offering materials) for a series   Not allocable; to be borne by the manager
    Audit and accounting work related to the regulatory paperwork or a series   Allocable directly to the applicable series property
    Compliance work including diligence related to the preparation of a series   Not allocable; to be borne by the manager
    Insurance of a series property as at time of acquisition  

Allocable directly to the applicable series property

    Broker fees other than cash commissions (e.g., expense reimbursement)  Brokerage fee payable per filing of a Form 1-A Post-Qualification Amendment ($1,000 per 1-A POS)   Not allocable; to be borne by the manager  Allocable directly to the applicable series
    Preparation of marketing materials   Not allocable; to be borne by the manager
Operating Expense   Property management fees   Allocable directly to the applicable series property
    Asset management fees   Allocable directly to the applicable series property
    Audit and accounting work related to the regulatory paperwork of a series   Allocable pro rata to the number of series properties
    Security (e.g., surveillance and patrols)   Allocable pro rata to the value of each series property
    Insurance   Allocable directly to the applicable series property
    Maintenance   Allocable directly to the applicable series property
    Property marketing or lease concessions, including special offers and terms   Allocable directly to the applicable series property
    Property disposition fee   Allocable directly to the applicable series property
    Interest expense, if any, when a series property holds any type of term loan or line of credit   Allocable directly to the applicable series property
    Audit, accounting and bookkeeping related to the reporting requirements of a series   Allocable pro rata to the number of series properties
Indemnification Payments   Indemnification payments under the operating agreement   Allocable pro rata to the value of each series property

 

Notwithstanding the foregoing, the manager may revise and update the allocation policy from time to time in its reasonable discretion without further notice to the investors.

 

The Arrived Platform

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Arrived Holdings, Inc., the manager, owns and operates a web-based and mobile accessible investment platform, the Arrived platform. Through the use of the Arrived platform, investors can browse and screen the investments offered by each of our series, now existing or to be formed by our company in the future, create an Arrived Homes Wallet account, and electronically sign legal documents to purchase series interests.

 

Competition

 

There are a number of established and emerging competitors in the real estate investment platform market. The market is fragmented, rapidly evolving, competitive, and with relatively low barriers to entry. We consider our competitive differentiators in our market to be:

 

  our focus on the single-family residential rental market;

 

  the ability for users to select which rental properties they would like to invest in;

 

  consistent rental income with use of moderate amounts of leverage;

 

  our unique investment strategy and approach to market selection;

 

  lower minimum investment amounts; and

 

  favorable tax treatment associated with REIT elections.

 

We face competition primarily from other real estate investment platform companies such as Roofstock, Inc., Fundrise LLC, and Compound Projects, LLC, as well as a range of emerging new entrants. In order to compete, we work tirelessly to innovate and improve our products, while at the same time preserving our unique culture and approach.

 

 

Conflicts of Interest

 

Conflicts of interest may exist or could arise in the future with the manager and its affiliates and our officers and/or directors who are also officers and/or directors of the manager. Conflicts may include, without limitation:

 

  Each of our executive officers will also serve as an officer of other the manager and its affiliated entities.  As a result, these persons will have a conflict of interest with respect to our agreements and arrangements with the manager and/or affiliates of the manager, which were not negotiated at arm’s length, and their terms may not have been as favorable to us as if they had been negotiated at arm’s length with an unaffiliated third party.  The manager is not required to make available any particular individual personnel to us.

 

  Our executive officers will not be required to devote a specific amount of time to our affairs.  As a result, we cannot provide any assurances regarding the amount of time the manager will dedicate to the management of our business.  Accordingly, we may compete with manager and any of its current and future programs, funds, vehicles, managed accounts, ventures or other entities owned and/or managed by the manager or one of its affiliates, which we refer to collectively as the manager-sponsored vehicles, for the time and attention of these officers in connection with our business.  We may not receive the level of support and assistance that we might otherwise receive if we were internally managed.

 

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  Some or all of the series will acquire their properties from the manager or from an affiliate of the manager. Prior to a sale to a series, the manager will acquire a property, repair and improve the property, and seek to place a tenant in the property. The manager will then resell the property to a series at a value determined by the manager or affiliate of the manager, which may reflect a premium over the manager’s investment in the property. Accordingly, because the manager will be an interested party with respect to a sale of a property that it owns to a series, the manager’s interests in such a sale may not be aligned with the interests of the series or its investors. There can be no assurance that a property purchase price that a series will pay to the manager will be comparable to that which a series might pay to an unaffiliated third party property seller.

 

  The manager may in the future form or sponsor additional manager-sponsored vehicles, which could have overlapping investment objectives. To the extent we have sufficient capital to acquire a property that the manager has determined to be suitable for us, that property will be allocated to us.

 

  The manager does not assume any responsibility beyond the duties specified in the operating agreement and will not be responsible for any action of our board of directors in following or declining to follow the manager’s advice or recommendations.  The manager’s liability is limited under the operating agreement and we have agreed to reimburse, indemnify and hold harmless the manager and its affiliates, with respect to all expenses, losses, damages, liabilities, demands, charges and claims in respect of, or arising from acts or omissions of, such indemnified parties not constituting bad faith, willful misconduct, gross negligence or reckless disregard of the manager’s duties under the operating agreement which has a material adverse effect on us.  As a result, we could experience poor performance or losses for which the manager would not be liable.

 

Employees

 

Our company does not have any employees. All of the officers and directors of our company are employees of the manager.

 

Legal Proceedings

 

None of our company, any series, the manager, or any director or executive officer of our company or the manager is presently subject to any material legal proceedings.

 

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THE SERIES PROPERTIES BEING OFFERED

 

 
Summary Overview
 
Arrived Series Adams is being established to allow investors who acquire Arrived Series Adams interests in the Arrived Series Adams offering to own an indirect interest in the single family home located at 2302 Beacon Road, Talbott , TN 27877, the Arrived Series Adams property.
 
Arrived Series Adams completed the acquisition of the Arrived Series Adams property on November 12, 2024. The acquisition of the Arrived Series Adams property was funded entirely by cash advanced by the manager. The Arrived Series Adams property is being held by Arrived TN Adams, LLC, a Tennessee limited liability company, which, on the closing of the offering, will be a wholly owned subsidiary of Arrived Series Adams. See the “Use of Proceeds” section below for additional information regarding anticipated expenses and uses of offering proceeds.
 
Property Summary
 
2302 Beacon Road is a single-family home in Talbott, TN.
 
Property Name
The Adams
Address
2302 Beacon Road, Talbott , TN 27877
Year Built
2022
Bedrooms
4
Baths
2.5
Square Footage
1966
  
Property History 
 
The Arrived Series Adams property was built in 2022. Arrived Series Adams expects to incur approximately $10,000 of costs related to certain improvement projects to the property.
 
Prior to the acquisition of the Arrived Series Adams property, the Arrived Series Adams property was previously owner occupied and has not been operated as a rental income property.
  
Acquisition of the Arrived Series Adams Property
 
Arrived Series Adams completed the acquisition of the Arrived Series Adams property from an unaffiliated, third-party seller on November 12, 2024 at a purchase price of $304,000.
 
The acquisition of the Arrived Series Adams property was funded entirely by cash advanced by the manager. In exchange for advancing the cash, Arrived Series Adams has issued a non-interest bearing promissory note to the manager in an amount of $332,400, which has a term of 11 months.
 
Property Components & Capital Expenditures
 
The Arrived Series Adams property was inspected by a licensed professional, and the inspection report indicated that the major property components are in acceptable, functional condition, with no obvious signs of defect.
 
With the current expected level and quality of the property components we will not recognize any deferred maintenance items and we expect that the major property components will remain in working order during the anticipated hold period for this property. In our operating estimates, we forecast a potential cost of maintenance and capital expenses as a percentage of rental income. In the case of unforeseen maintenance expenses, we could make use of our cash reserves, if necessary.
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We anticipate that the final renovation cost for this property will total approximately $10,000. These renovations may include new appliances and cosmetic improvements as well as various punch list items throughout the property. This renovation expense is listed in the use of proceeds for Arrived Series Adams. 
  
Property Manager
 
The manager appointed an unaffiliated, third-party property manager, Marketplace Homes, to manage the Arrived Series Adams property on a discretionary basis and has entered into a property management agreement with the property manager.  Pursuant to the terms of the property management agreement, Arrived Series Adams will pay the property manager an annual fee for managing the Arrived Series Adams property.
 
Property Operations and Hold Period
 
The Arrived Series Adams property was previously owner occupied and has no prior rental history. The manager intends to list the property for rent at a rate of $2,095 per month, or $25,140 per year, which is consistent with other single family homes in the same area of Talbott, TN.
 
The manager anticipates that this property’s Operating Expenses, which include real estate taxes, property insurance and repairs and maintenance costs, will be in the range of $688 to $883 per month. This estimate is based on the manager’s due diligence calculations and does not take into account amounts for capital expenditures for major repairs. At this time we do not anticipate any significant capital expenditures for the Arrived Series Adams property. For information relating to our capital expenditure expectations, see “Property Components & Capital Expenditures” above.
 
We intend to hold the Arrived Series Adams property for five to seven years during which time, we will operate the Arrived Series Adams property as a rental property. During this period, we intend to distribute any Free Cash Flow (as defined below) to Arrived Series Adams interest holders. The determination as to when the Arrived Series Adams property should be sold or otherwise disposed of will be made after consideration of relevant factors, including prevailing and projected economic conditions, whether the value of the property is anticipated to appreciate or decline substantially, and how any existing lease may impact the sales price we may realize. The manager may determine that it is in the best interests of shareholders to sell the Arrived Series Adams property earlier than five years or to hold the property for more than seven years.
 
Asset Management Fee.
 
Our annual asset management fee will total $1,824, which is equal to 0.6% of the purchase price of the series property per year. Such fee will be taken out of the series net operating rental income on a quarterly basis.
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Summary Overview
 
Arrived Series Bayne is being established to allow investors who acquire Arrived Series Bayne interests in the Arrived Series Bayne offering to own an indirect interest in the single family home located at 821 Magnolia Ridge Drive, Blountville, TN 37617, the Arrived Series Bayne property.
 
Arrived Series Bayne completed the acquisition of the Arrived Series Bayne property on November 20, 2024. The acquisition of the Arrived Series Bayne property was funded entirely by cash advanced by the manager. The Arrived Series Bayne property is being held by Arrived TN Bayne, LLC, a Tennessee limited liability company, which, on the closing of the offering, will be a wholly owned subsidiary of Arrived Series Bayne. See the “Use of Proceeds” section below for additional information regarding anticipated expenses and uses of offering proceeds.
 
Property Summary
 
821 Magnolia Ridge Drive is a single-family home in Blountville, TN.
 
Property Name
The Bayne
Address
821 Magnolia Ridge Drive, Blountville, TN 37617
Year Built
2024
Bedrooms
5
Baths
3
Square Footage
2511
  
Property History 
 
The Arrived Series Bayne property was built in 2024. Arrived Series Bayne expects to incur approximately $10,000 of costs related to certain improvement projects to the property.
 
Prior to the acquisition of the Arrived Series Bayne property, the Arrived Series Bayne property was newly built and has not been operated as a rental income property.
  
Acquisition of the Arrived Series Bayne Property
 
Arrived Series Bayne completed the acquisition of the Arrived Series Bayne property from an unaffiliated, third-party seller on November 20, 2024 at a purchase price of $347,625.
 
The acquisition of the Arrived Series Bayne property was funded entirely by cash advanced by the manager. In exchange for advancing the cash, Arrived Series Bayne has issued a non-interest bearing promissory note to the manager in an amount of $379,600, which has a term of 11 months.
 
Property Components & Capital Expenditures
 
The Arrived Series Bayne property was inspected by a licensed professional, and the inspection report indicated that the major property components are in acceptable, functional condition, with no obvious signs of defect.
 
With the current expected level and quality of the property components we will not recognize any deferred maintenance items and we expect that the major property components will remain in working order during the anticipated hold period for this property. In our operating estimates, we forecast a potential cost of maintenance and capital expenses as a percentage of rental income. In the case of unforeseen maintenance expenses, we could make use of our cash reserves, if necessary.
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We anticipate that the final renovation cost for this property will total approximately $10,000. These renovations may include new appliances and cosmetic improvements as well as various punch list items throughout the property. This renovation expense is listed in the use of proceeds for Arrived Series Bayne. 
  
Property Manager
 
The manager appointed an unaffiliated, third-party property manager, Marketplace Homes, to manage the Arrived Series Bayne property on a discretionary basis and has entered into a property management agreement with the property manager.  Pursuant to the terms of the property management agreement, Arrived Series Bayne will pay the property manager an annual fee for managing the Arrived Series Bayne property.
 
Property Operations and Hold Period
 
The Arrived Series Bayne property is newly built and has no prior rental history. The manager intends to list the property for rent at a rate of $2,295 per month, or $27,540 per year, which is consistent with other single family homes in the same area of Blountville, TN.
 
The manager anticipates that this property’s Operating Expenses, which include real estate taxes, property insurance and repairs and maintenance costs, will be in the range of $752 to $947 per month. This estimate is based on the manager’s due diligence calculations and does not take into account amounts for capital expenditures for major repairs. At this time we do not anticipate any significant capital expenditures for the Arrived Series Bayne property. For information relating to our capital expenditure expectations, see “Property Components & Capital Expenditures” above.
 
We intend to hold the Arrived Series Bayne property for five to seven years during which time, we will operate the Arrived Series Bayne property as a rental property. During this period, we intend to distribute any Free Cash Flow (as defined below) to Arrived Series Bayne interest holders. The determination as to when the Arrived Series Bayne property should be sold or otherwise disposed of will be made after consideration of relevant factors, including prevailing and projected economic conditions, whether the value of the property is anticipated to appreciate or decline substantially, and how any existing lease may impact the sales price we may realize. The manager may determine that it is in the best interests of shareholders to sell the Arrived Series Bayne property earlier than five years or to hold the property for more than seven years.
 
Asset Management Fee.
 
Our annual asset management fee will total $2,086, which is equal to 0.6% of the purchase price of the series property per year. Such fee will be taken out of the series net operating rental income on a quarterly basis.
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Summary Overview
 
Arrived Series Boxwood is being established to allow investors who acquire Arrived Series Boxwood interests in the Arrived Series Boxwood offering to own an indirect interest in the single family home located at 2068 Tulip Drive, Hernando, MS 38632, the Arrived Series Boxwood property.
 
Arrived Series Boxwood completed the acquisition of the Arrived Series Boxwood property on November 20, 2024. The acquisition of the Arrived Series Boxwood property was funded entirely by cash advanced by the manager. The Arrived Series Boxwood property is being held by Arrived MS Boxwood, LLC, a Mississippi limited liability company, which, on the closing of the offering, will be a wholly owned subsidiary of Arrived Series Boxwood. See the “Use of Proceeds” section below for additional information regarding anticipated expenses and uses of offering proceeds.
 
Property Summary
 
2068 Tulip Drive is a single-family home in Hernando, MS.
 
Property Name
The Boxwood
Address
2068 Tulip Drive, Hernando, MS 38632
Year Built
2024
Bedrooms
4
Baths
3
Square Footage
2025
  
Property History 
 
The Arrived Series Boxwood property was built in 2024. Arrived Series Boxwood expects to incur approximately $10,000 of costs related to certain improvement projects to the property.
 
Prior to the acquisition of the Arrived Series Boxwood property, the Arrived Series Boxwood property was newly built and has not been operated as a rental income property.
  
Acquisition of the Arrived Series Boxwood Property
 
Arrived Series Boxwood completed the acquisition of the Arrived Series Boxwood property from an unaffiliated, third-party seller on November 20, 2024 at a purchase price of $324,990. Such purchase price is comprised of a seller credit in the amount of $2,486 with the remainder paid in cash. 
 
The acquisition of the Arrived Series Boxwood property was funded entirely by cash advanced by the manager. In exchange for advancing the cash, Arrived Series Boxwood has issued a non-interest bearing promissory note to the manager in an amount of $351,900, which has a term of 11 months.
 
Property Components & Capital Expenditures
 
The Arrived Series Boxwood property was inspected by a licensed professional, and the inspection report indicated that the major property components are in acceptable, functional condition, with no obvious signs of defect.
 
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With the current expected level and quality of the property components we will not recognize any deferred maintenance items and we expect that the major property components will remain in working order during the anticipated hold period for this property. In our operating estimates, we forecast a potential cost of maintenance and capital expenses as a percentage of rental income. In the case of unforeseen maintenance expenses, we could make use of our cash reserves, if necessary.
 
We anticipate that the final renovation cost for this property will total approximately $10,000. These renovations may include new appliances and cosmetic improvements as well as various punch list items throughout the property. This renovation expense is listed in the use of proceeds for Arrived Series Boxwood. 
  
Property Manager
 
The manager appointed an unaffiliated, third-party property manager, Marketplace Homes, to manage the Arrived Series Boxwood property on a discretionary basis and has entered into a property management agreement with the property manager.  Pursuant to the terms of the property management agreement, Arrived Series Boxwood will pay the property manager an annual fee for managing the Arrived Series Boxwood property.
 
Property Operations and Hold Period
 
The Arrived Series Boxwood property is newly built and has no prior rental history. The manager intends to list the property for rent at a rate of $2,095 per month, or $25,140 per year, which is consistent with other single family homes in the same area of Hernando, MS.
 
The manager anticipates that this property’s Operating Expenses, which include real estate taxes, property insurance and repairs and maintenance costs, will be in the range of $675 to $870 per month. This estimate is based on the manager’s due diligence calculations and does not take into account amounts for capital expenditures for major repairs. At this time we do not anticipate any significant capital expenditures for the Arrived Series Boxwood property. For information relating to our capital expenditure expectations, see “Property Components & Capital Expenditures” above.
 
We intend to hold the Arrived Series Boxwood property for five to seven years during which time, we will operate the Arrived Series Boxwood property as a rental property. During this period, we intend to distribute any Free Cash Flow (as defined below) to Arrived Series Boxwood interest holders. The determination as to when the Arrived Series Boxwood property should be sold or otherwise disposed of will be made after consideration of relevant factors, including prevailing and projected economic conditions, whether the value of the property is anticipated to appreciate or decline substantially, and how any existing lease may impact the sales price we may realize. The manager may determine that it is in the best interests of shareholders to sell the Arrived Series Boxwood property earlier than five years or to hold the property for more than seven years.
 
Asset Management Fee.
 
Our annual asset management fee will total $1,935, which is equal to 0.6% of the purchase price of the series property per year. Such fee will be taken out of the series net operating rental income on a quarterly basis.
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Summary Overview
 
Arrived Series Langley is being established to allow investors who acquire Arrived Series Langley interests in the Arrived Series Langley offering to own an indirect interest in the single family home located at 731 30th Street, Newport News, VA 23607, the Arrived Series Langley property.
 
Arrived Series Langley completed the acquisition of the Arrived Series Langley property on November 6, 2024. The acquisition of the Arrived Series Langley property was funded entirely by cash advanced by the manager. The Arrived Series Langley property is being held by Arrived VA Langley, LLC, a Virginia limited liability company, which, on the closing of the offering, will be a wholly owned subsidiary of Arrived Series Langley. See the “Use of Proceeds” section below for additional information regarding anticipated expenses and uses of offering proceeds.
 
Property Summary
 
731 30th Street is a single-family home in Newport News, VA.
 
Property Name
The Langley
Address
731 30th Street, Newport News, VA 23607
Year Built
2024
Bedrooms
4
Baths
3
Square Footage
2700
  
Property History 
 
The Arrived Series Langley property was built in 2024. Arrived Series Langley expects to incur approximately $10,000 of costs related to certain improvement projects to the property.
 
Prior to the acquisition of the Arrived Series Langley property, the Arrived Series Langley property was newly built and has not been operated as a rental income property.
  
Acquisition of the Arrived Series Langley Property
 
Arrived Series Langley completed the acquisition of the Arrived Series Langley property from an unaffiliated, third-party seller on November 6, 2024 at a purchase price of $335,000. Such purchase price is comprised of a seller credit in the amount of $5,000, with the remainder paid in cash.
 
The acquisition of the Arrived Series Langley property was funded entirely by cash advanced by the manager. In exchange for advancing the cash, Arrived Series Langley has issued a non-interest bearing promissory note to the manager in an amount of $361,800, which has a term of 11 months.
 
Property Components & Capital Expenditures
 
The Arrived Series Langley property was inspected by a licensed professional, and the inspection report indicated that the major property components are in acceptable, functional condition, with no obvious signs of defect.
 
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With the current expected level and quality of the property components we will not recognize any deferred maintenance items and we expect that the major property components will remain in working order during the anticipated hold period for this property. In our operating estimates, we forecast a potential cost of maintenance and capital expenses as a percentage of rental income. In the case of unforeseen maintenance expenses, we could make use of our cash reserves, if necessary.
 
We anticipate that the final renovation cost for this property will total approximately $10,000. These renovations may include new appliances and cosmetic improvements as well as various punch list items throughout the property. This renovation expense is listed in the use of proceeds for Arrived Series Langley. 
  
Property Manager
 
The manager appointed an unaffiliated, third-party property manager, Marketplace Homes, to manage the Arrived Series Langley property on a discretionary basis and has entered into a property management agreement with the property manager.  Pursuant to the terms of the property management agreement, Arrived Series Langley will pay the property manager an annual fee for managing the Arrived Series Langley property.
 
Property Operations and Hold Period
 
The Arrived Series Langley property is newly built and has no prior rental history. The manager intends to list the property for rent at a rate of $2,295 per month, or $27,540 per year, which is consistent with other single family homes in the same area of Newport News, VA.
 
The manager anticipates that this property’s Operating Expenses, which include real estate taxes, property insurance and repairs and maintenance costs, will be in the range of $770 to $965 per month. This estimate is based on the manager’s due diligence calculations and does not take into account amounts for capital expenditures for major repairs. At this time we do not anticipate any significant capital expenditures for the Arrived Series Langley property. For information relating to our capital expenditure expectations, see “Property Components & Capital Expenditures” above.
 
We intend to hold the Arrived Series Langley property for five to seven years during which time, we will operate the Arrived Series Langley property as a rental property. During this period, we intend to distribute any Free Cash Flow (as defined below) to Arrived Series Langley interest holders. The determination as to when the Arrived Series Langley property should be sold or otherwise disposed of will be made after consideration of relevant factors, including prevailing and projected economic conditions, whether the value of the property is anticipated to appreciate or decline substantially, and how any existing lease may impact the sales price we may realize. The manager may determine that it is in the best interests of shareholders to sell the Arrived Series Langley property earlier than five years or to hold the property for more than seven years.
 
Asset Management Fee.
 
Our annual asset management fee will total $1,980, which is equal to 0.6% of the purchase price of the series property per year. Such fee will be taken out of the series net operating rental income on a quarterly basis.
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Summary Overview
  
Arrived Series Metallo is being established to allow investors who acquire Arrived Series Metallo interests in the Arrived Series Metallo offering to own an indirect interest in the single family home located at 5318 Selah Street, Springdale, AR 72764, the Arrived Series Metallo property.
  
Arrived Series Metallo expects to complete the acquisition of the Arrived Series Metallo property, in accordance with one of the acquisition methods discussed above, on or about December 4, 2024. The acquisition of the Arrived Series Metallo property will be funded entirely by cash advanced by the manager. The Arrived Series Metallo property will be held by Arrived AR Metallo, LLC, an Arkansas limited liability company, which, on the closing of the offering, will be a wholly owned subsidiary of Arrived Series Metallo. See the “Use of Proceeds” section below for additional information regarding anticipated expenses and uses of offering proceeds.
  
Property Summary
  
5318 Selah Street is a single-family home in Springdale, AR.
  
Property Name
The Metallo
Address
5318 Selah Street, Springdale, AR 72764
Year Built
2024
Bedrooms
3
Baths
2.5
Square Footage
1898
   
Property History 
  
The Arrived Series Metallo property was built in 2024. Arrived Series Metallo expects to incur approximately $10,000 of costs related to certain improvement projects to the property.
  
Prior to the acquisition of the Arrived Series Metallo property, the Arrived Series Metallo property was newly built and has not been operated as a rental income property.
   
Acquisition of the Arrived Series Metallo Property
  
Arrived Series Metallo expects to complete the acquisition of the Arrived Series Metallo property from an unaffiliated, third-party seller on or about December 4, 2024 at a purchase price of $299,000. Such purchase price will be comprised of a seller credit in the amount of $5,000, with the remainder to be paid in cash.
  
We expect that the acquisition of the Arrived Series Metallo property will be funded entirely by cash advanced by the manager. In exchange for advancing the cash, Arrived Series Metallo will issue a non-interest bearing promissory note to the manager in the amount of $320,900, which will have a term of 11 months.
  
Property Components & Capital Expenditures
  
The Arrived Series Metallo property was inspected by a licensed professional, and the inspection report indicated that the major property components are in acceptable, functional condition, with no obvious signs of defect.
  
With the current expected level and quality of the property components we will not recognize any deferred maintenance items and we expect that the major property components will remain in working order during the anticipated hold period for this property. In our operating estimates, we forecast a potential cost of maintenance and capital expenses as a percentage of rental income. In the case of unforeseen maintenance expenses, we could make use of our cash reserves, if necessary.
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We anticipate that the final renovation cost for this property will total approximately $10,000. These renovations may include new appliances and cosmetic improvements as well as various punch list items throughout the property. This renovation expense is listed in the use of proceeds for Arrived Series Metallo. 
   
Property Manager
  
The manager appointed an unaffiliated, third-party property manager, Marketplace Homes, to manage the Arrived Series Metallo property on a discretionary basis and has entered into a property management agreement with the property manager.  Pursuant to the terms of the property management agreement, Arrived Series Metallo will pay the property manager an annual fee for managing the Arrived Series Metallo property.
  
Property Operations and Hold Period
  
The Arrived Series Metallo property is newly built and has no prior rental history. The manager intends to list the property for rent at a rate of $1,895 per month, or $22,740 per year, which is consistent with other single family homes in the same area of Springdale, AR.
  
The manager anticipates that this property’s Operating Expenses, which include real estate taxes, property insurance and repairs and maintenance costs, will be in the range of $610 to $805 per month. This estimate is based on the manager’s due diligence calculations and does not take into account amounts for capital expenditures for major repairs. At this time we do not anticipate any significant capital expenditures for the Arrived Series Metallo property. For information relating to our capital expenditure expectations, see “Property Components & Capital Expenditures” above.
  
We intend to hold the Arrived Series Metallo property for five to seven years during which time, we will operate the Arrived Series Metallo property as a rental property. During this period, we intend to distribute any Free Cash Flow (as defined below) to Arrived Series Metallo interest holders. The determination as to when the Arrived Series Metallo property should be sold or otherwise disposed of will be made after consideration of relevant factors, including prevailing and projected economic conditions, whether the value of the property is anticipated to appreciate or decline substantially, and how any existing lease may impact the sales price we may realize. The manager may determine that it is in the best interests of shareholders to sell the Arrived Series Metallo property earlier than five years or to hold the property for more than seven years.
  
Asset Management Fee.
  
Our annual asset management fee will total $1,764, which is equal to 0.6% of the purchase price of the series property per year. Such fee will be taken out of the series net operating rental income on a quarterly basis.
 
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Summary Overview
 
Arrived Series Misty is being established to allow investors who acquire Arrived Series Misty interests in the Arrived Series Misty offering to own an indirect interest in the single family home located at 5410 Misty Crossing Court, Florissant, MO 63034, the Arrived Series Misty property.
 
Arrived Series Misty completed the acquisition of the Arrived Series Misty property on November 13, 2024. The acquisition of the Arrived Series Misty property was funded entirely by cash advanced by the manager. The Arrived Series Misty property is being held by Arrived MO Misty, LLC, a Missouri limited liability company, which, on the closing of the offering, will be a wholly owned subsidiary of Arrived Series Misty. See the “Use of Proceeds” section below for additional information regarding anticipated expenses and uses of offering proceeds.
 
Property Summary
 
5410 Misty Crossing Court is a single-family home in Florissant, MO.
 
Property Name
The Misty
Address
5410 Misty Crossing Court, Florissant, MO 63034
Year Built
2017
Bedrooms
4
Baths
3
Square Footage
3000
  
Property History 
 
The Arrived Series Misty property was built in 2017. Arrived Series Misty expects to incur approximately $12,000 of costs related to certain improvement projects to the property.
 
Prior to the acquisition of the Arrived Series Misty property, the Arrived Series Misty property was previously owner occupied and has not been operated as a rental income property.
  
Acquisition of the Arrived Series Misty Property
 
Arrived Series Misty completed the acquisition of the Arrived Series Misty property from an unaffiliated, third-party seller on November 13, 2024 at a purchase price of $345,000.
 
The acquisition of the Arrived Series Misty property was funded entirely by cash advanced by the manager. In exchange for advancing the cash, Arrived Series Misty has issued a non-interest bearing promissory note to the manager in an amount of $374,800, which has a term of 11 months.
 
Property Components & Capital Expenditures
 
The Arrived Series Misty property was inspected by a licensed professional, and the inspection report indicated that the major property components are in acceptable, functional condition, with no obvious signs of defect.
 
With the current expected level and quality of the property components we will not recognize any deferred maintenance items and we expect that the major property components will remain in working order during the anticipated hold period for this property. In our operating estimates, we forecast a potential cost of maintenance and capital expenses as a percentage of rental income. In the case of unforeseen maintenance expenses, we could make use of our cash reserves, if necessary.
 
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We anticipate that the final renovation cost for this property will total approximately $12,000. These renovations may include new appliances and cosmetic improvements as well as various punch list items throughout the property. This renovation expense is listed in the use of proceeds for Arrived Series Misty. 
  
Property Manager
 
The manager appointed an unaffiliated, third-party property manager, Marketplace Homes, to manage the Arrived Series Misty property on a discretionary basis and has entered into a property management agreement with the property manager.  Pursuant to the terms of the property management agreement, Arrived Series Misty will pay the property manager an annual fee for managing the Arrived Series Misty property.
 
Property Operations and Hold Period
 
The Arrived Series Misty property was previously owner occupied and has no prior rental history. The manager intends to list the property for rent at a rate of $2,395 per month, or $28,740 per year, which is consistent with other single family homes in the same area of Florissant, MO.
 
The manager anticipates that this property’s Operating Expenses, which include real estate taxes, property insurance and repairs and maintenance costs, will be in the range of $847 to $1,042 per month. This estimate is based on the manager’s due diligence calculations and does not take into account amounts for capital expenditures for major repairs. At this time we do not anticipate any significant capital expenditures for the Arrived Series Misty property. For information relating to our capital expenditure expectations, see “Property Components & Capital Expenditures” above.
 
We intend to hold the Arrived Series Misty property for five to seven years during which time, we will operate the Arrived Series Misty property as a rental property. During this period, we intend to distribute any Free Cash Flow (as defined below) to Arrived Series Misty interest holders. The determination as to when the Arrived Series Misty property should be sold or otherwise disposed of will be made after consideration of relevant factors, including prevailing and projected economic conditions, whether the value of the property is anticipated to appreciate or decline substantially, and how any existing lease may impact the sales price we may realize. The manager may determine that it is in the best interests of shareholders to sell the Arrived Series Misty property earlier than five years or to hold the property for more than seven years.
 
Asset Management Fee.
 
Our annual asset management fee will total $2,070, which is equal to 0.6% of the purchase price of the series property per year. Such fee will be taken out of the series net operating rental income on a quarterly basis.
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Summary Overview
 
Arrived Series Presidio is being established to allow investors who acquire Arrived Series Presidio interests in the Arrived Series Presidio offering to own an indirect interest in the single family home located at 4047 Little Bighorn Drive, Indianapolis, IN 46235, the Arrived Series Presidio property.
 
Arrived Series Presidio completed the acquisition of the Arrived Series Presidio property on November 13, 2024. The acquisition of the Arrived Series Presidio property was funded entirely by cash advanced by the manager. The Arrived Series Presidio property is being held by Arrived IN Presidio, LLC, an Indiana limited liability company, which, on the closing of the offering, will be a wholly owned subsidiary of Arrived Series Presidio. See the “Use of Proceeds” section below for additional information regarding anticipated expenses and uses of offering proceeds.
 
Property Summary
 
4047 Little Bighorn Drive is a single-family home in Indianapolis, IN.
 
Property Name
The Presidio
Address
4047 Little Bighorn Drive, Indianapolis, IN 46235
Year Built
2018
Bedrooms
4
Baths
2.5
Square Footage
1698
  
Property History 
 
The Arrived Series Presidio property was built in 2018. Arrived Series Presidio expects to incur approximately $8,000 of costs related to certain improvement projects to the property.
 
Prior to the acquisition of the Arrived Series Presidio property, the Arrived Series Presidio property was previously owner occupied and has not been operated as a rental income property.
  
Acquisition of the Arrived Series Presidio Property
 
Arrived Series Presidio completed the acquisition of the Arrived Series Presidio property from an unaffiliated, third-party seller on November 13, 2024 at a purchase price of $242,000.
 
The acquisition of the Arrived Series Presidio property was funded entirely by cash advanced by the manager. In exchange for advancing the cash, Arrived Series Presidio has issued a non-interest bearing promissory note to the manager in an amount of $264,100, which has a term of 11 months.
 
Property Components & Capital Expenditures
 
The Arrived Series Presidio property was inspected by a licensed professional, and the inspection report indicated that the major property components are in acceptable, functional condition, with no obvious signs of defect.
 
With the current expected level and quality of the property components we will not recognize any deferred maintenance items and we expect that the major property components will remain in working order during the anticipated hold period for this property. In our operating estimates, we forecast a potential cost of maintenance and capital expenses as a percentage of rental income. In the case of unforeseen maintenance expenses, we could make use of our cash reserves, if necessary.
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We anticipate that the final renovation cost for this property will total approximately $8,000. These renovations may include new appliances and cosmetic improvements as well as various punch list items throughout the property. This renovation expense is listed in the use of proceeds for Arrived Series Presidio. 
  
Property Manager
 
The manager appointed an unaffiliated, third-party property manager, Marketplace Homes, to manage the Arrived Series Presidio property on a discretionary basis and has entered into a property management agreement with the property manager.  Pursuant to the terms of the property management agreement, Arrived Series Presidio will pay the property manager an annual fee for managing the Arrived Series Presidio property.
 
Property Operations and Hold Period
 
The Arrived Series Presidio property was previously owner occupied and has no prior rental history. The manager intends to list the property for rent at a rate of $1,695 per month, or $20,340 per year, which is consistent with other single family homes in the same area of Indianapolis, IN.
 
The manager anticipates that this property’s Operating Expenses, which include real estate taxes, property insurance and repairs and maintenance costs, will be in the range of $685 to $880 per month. This estimate is based on the manager’s due diligence calculations and does not take into account amounts for capital expenditures for major repairs. At this time we do not anticipate any significant capital expenditures for the Arrived Series Presidio property. For information relating to our capital expenditure expectations, see “Property Components & Capital Expenditures” above.
 
We intend to hold the Arrived Series Presidio property for five to seven years during which time, we will operate the Arrived Series Presidio property as a rental property. During this period, we intend to distribute any Free Cash Flow (as defined below) to Arrived Series Presidio interest holders. The determination as to when the Arrived Series Presidio property should be sold or otherwise disposed of will be made after consideration of relevant factors, including prevailing and projected economic conditions, whether the value of the property is anticipated to appreciate or decline substantially, and how any existing lease may impact the sales price we may realize. The manager may determine that it is in the best interests of shareholders to sell the Arrived Series Presidio property earlier than five years or to hold the property for more than seven years.
 
Asset Management Fee.
 
Our annual asset management fee will total $1,452, which is equal to 0.6% of the purchase price of the series property per year. Such fee will be taken out of the series net operating rental income on a quarterly basis.
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Summary Overview
 
Arrived Series Spangler is being established to allow investors who acquire Arrived Series Spangler interests in the Arrived Series Spangler offering to own an indirect interest in the single family home located at 2807 Bentwood Drive, Independence, KY 41051, the Arrived Series Spangler property.
 
Arrived Series Spangler completed the acquisition of the Arrived Series Spangler property on November 20, 2024. The acquisition of the Arrived Series Spangler property was funded entirely by cash advanced by the manager. The Arrived Series Spangler property is being held by Arrived KY Spangler, LLC, a Kentucky limited liability company, which, on the closing of the offering, will be a wholly owned subsidiary of Arrived Series Spangler. See the “Use of Proceeds” section below for additional information regarding anticipated expenses and uses of offering proceeds.
 
Property Summary
 
2807 Bentwood Drive is a single-family home in Independence, KY.
 
Property Name
The Spangler
Address
2807 Bentwood Drive, Independence, KY 41051
Year Built
2014
Bedrooms
4
Baths
2.5
Square Footage
2804
  
Property History 
 
The Arrived Series Spangler property was built in 2014. Arrived Series Spangler expects to incur approximately $15,000 of costs related to certain improvement projects to the property.
 
Prior to the acquisition of the Arrived Series Spangler property, the Arrived Series Spangler property was previously owner occupied and has not been operated as a rental income property.
  
Acquisition of the Arrived Series Spangler Property
 
Arrived Series Spangler completed the acquisition of the Arrived Series Spangler property from an unaffiliated, third-party seller on November 20, 2024 at a purchase price of $382,000.
 
The acquisition of the Arrived Series Spangler property was funded entirely by cash advanced by the manager. In exchange for advancing the cash, Arrived Series Spangler has issued a non-interest bearing promissory note to the manager in an amount of $415,800, which has a term of 11 months.
 
Property Components & Capital Expenditures
 
The Arrived Series Spangler property was inspected by a licensed professional, and the inspection report indicated that the major property components are in acceptable, functional condition, with no obvious signs of defect.
 
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With the current expected level and quality of the property components we will not recognize any deferred maintenance items and we expect that the major property components will remain in working order during the anticipated hold period for this property. In our operating estimates, we forecast a potential cost of maintenance and capital expenses as a percentage of rental income. In the case of unforeseen maintenance expenses, we could make use of our cash reserves, if necessary.
 
We anticipate that the final renovation cost for this property will total approximately $15,000. These renovations may include new appliances and cosmetic improvements as well as various punch list items throughout the property. This renovation expense is listed in the use of proceeds for Arrived Series Spangler. 
  
Property Manager
 
The manager appointed an unaffiliated, third-party property manager, Marketplace Homes, to manage the Arrived Series Spangler property on a discretionary basis and has entered into a property management agreement with the property manager.  Pursuant to the terms of the property management agreement, Arrived Series Spangler will pay the property manager an annual fee for managing the Arrived Series Spangler property.
 
Property Operations and Hold Period
 
The Arrived Series Spangler property was previously owner occupied and has no prior rental history. The manager intends to list the property for rent at a rate of $2,595 per month, or $31,140 per year, which is consistent with other single family homes in the same area of Independence, KY.
 
The manager anticipates that this property’s Operating Expenses, which include real estate taxes, property insurance and repairs and maintenance costs, will be in the range of $983 to $1,178 per month. This estimate is based on the manager’s due diligence calculations and does not take into account amounts for capital expenditures for major repairs. At this time we do not anticipate any significant capital expenditures for the Arrived Series Spangler property. For information relating to our capital expenditure expectations, see “Property Components & Capital Expenditures” above.
 
We intend to hold the Arrived Series Spangler property for five to seven years during which time, we will operate the Arrived Series Spangler property as a rental property. During this period, we intend to distribute any Free Cash Flow (as defined below) to Arrived Series Spangler interest holders. The determination as to when the Arrived Series Spangler property should be sold or otherwise disposed of will be made after consideration of relevant factors, including prevailing and projected economic conditions, whether the value of the property is anticipated to appreciate or decline substantially, and how any existing lease may impact the sales price we may realize. The manager may determine that it is in the best interests of shareholders to sell the Arrived Series Spangler property earlier than five years or to hold the property for more than seven years.
 
Asset Management Fee.
 
Our annual asset management fee will total $2,292, which is equal to 0.6% of the purchase price of the series property per year. Such fee will be taken out of the series net operating rental income on a quarterly basis.
 
 
 
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Summary Overview
 
Arrived Series Tomlinson is being established to allow investors who acquire Arrived Series Tomlinson interests in the Arrived Series Tomlinson offering to own an indirect interest in the single family home located at 955 Mossy Stone Court, Bowling Green, KY 42101, the Arrived Series Tomlinson property.
 
Arrived Series Tomlinson completed the acquisition of the Arrived Series Tomlinson property on November 13, 2024. The acquisition of the Arrived Series Tomlinson property was funded entirely by cash advanced by the manager. The Arrived Series Tomlinson property is being held by Arrived KY Tomlinson, LLC, a Kentucky limited liability company, which, on the closing of the offering, will be a wholly owned subsidiary of Arrived Series Tomlinson. See the “Use of Proceeds” section below for additional information regarding anticipated expenses and uses of offering proceeds.
 
Property Summary
 
955 Mossy Stone Court is a single-family home in Bowling Green, KY.
 
Property Name
The Tomlinson
Address
955 Mossy Stone Court, Bowling Green, KY 42101
Year Built
2015
Bedrooms
4
Baths
2
Square Footage
1643
  
Property History 
 
The Arrived Series Tomlinson property was built in 2015. Arrived Series Tomlinson expects to incur approximately $10,000 of costs related to certain improvement projects to the property.
 
Prior to the acquisition of the Arrived Series Tomlinson property, the Arrived Series Tomlinson property was previously owner occupied and has not been operated as a rental income property.
  
Acquisition of the Arrived Series Tomlinson Property
 
Arrived Series Tomlinson completed the acquisition of the Arrived Series Tomlinson property from an unaffiliated, third-party seller on November 13, 2024 at a purchase price of $245,000.
 
The acquisition of the Arrived Series Tomlinson property was funded entirely by cash advanced by the manager. In exchange for advancing the cash, Arrived Series Tomlinson has issued a non-interest bearing promissory note to the manager in an amount of $267,800, which has a term of 11 months.
 
Property Components & Capital Expenditures
 
The Arrived Series Tomlinson property was inspected by a licensed professional, and the inspection report indicated that the major property components are in acceptable, functional condition, with no obvious signs of defect.
 
With the current expected level and quality of the property components we will not recognize any deferred maintenance items and we expect that the major property components will remain in working order during the anticipated hold period for this property. In our operating estimates, we forecast a potential cost of maintenance and capital expenses as a percentage of rental income. In the case of unforeseen maintenance expenses, we could make use of our cash reserves, if necessary.
 
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We anticipate that the final renovation cost for this property will total approximately $10,000. These renovations may include new appliances and cosmetic improvements as well as various punch list items throughout the property. This renovation expense is listed in the use of proceeds for Arrived Series Tomlinson. 
  
Property Manager
 
The manager appointed an unaffiliated, third-party property manager, Marketplace Homes, to manage the Arrived Series Tomlinson property on a discretionary basis and has entered into a property management agreement with the property manager.  Pursuant to the terms of the property management agreement, Arrived Series Tomlinson will pay the property manager an annual fee for managing the Arrived Series Tomlinson property.
 
Property Operations and Hold Period
 
The Arrived Series Tomlinson property was previously owner occupied and has no prior rental history. The manager intends to list the property for rent at a rate of $1,595 per month, or $19,140 per year, which is consistent with other single family homes in the same area of Bowling Green, KY.
 
The manager anticipates that this property’s Operating Expenses, which include real estate taxes, property insurance and repairs and maintenance costs, will be in the range of $511 to $706 per month. This estimate is based on the manager’s due diligence calculations and does not take into account amounts for capital expenditures for major repairs. At this time we do not anticipate any significant capital expenditures for the Arrived Series Tomlinson property. For information relating to our capital expenditure expectations, see “Property Components & Capital Expenditures” above.
 
We intend to hold the Arrived Series Tomlinson property for five to seven years during which time, we will operate the Arrived Series Tomlinson property as a rental property. During this period, we intend to distribute any Free Cash Flow (as defined below) to Arrived Series Tomlinson interest holders. The determination as to when the Arrived Series Tomlinson property should be sold or otherwise disposed of will be made after consideration of relevant factors, including prevailing and projected economic conditions, whether the value of the property is anticipated to appreciate or decline substantially, and how any existing lease may impact the sales price we may realize. The manager may determine that it is in the best interests of shareholders to sell the Arrived Series Tomlinson property earlier than five years or to hold the property for more than seven years.
 
Asset Management Fee.
 
Our annual asset management fee will total $1,470, which is equal to 0.6% of the purchase price of the series property per year. Such fee will be taken out of the series net operating rental income on a quarterly basis.
 
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USE OF PROCEEDS TO ISSUER

 
 
The total cost to acquire and improve the Arrived Series Adams property, including applicable fees, expenses and reserves is $361,220.
 
We estimate that the gross proceeds of the offering of Arrived Series Adams interests will be approximately $361,220, assuming the full amount of the offering is sold, and will be used in the following order of priority of payment:
 
                 
Uses
 
Amount
 
 
Percentage of Gross Proceeds
 
Acquisition of Property(1)
 
$
304,000
 
 
 
84.16
%
Property Improvements (2)
 
$
10,000
 
 
 
2.77
%
Operating & Capital Reserves
 
$
15,200
 
 
 
4.21
%
Brokerage Fee
 
$
3,612
 
 
 
1.00
%
Acquisition Expenses (3)
 
$
5,220
 
 
 
1.45
%
Offering Expenses(4)
 
$
7,224
 
 
 
2.00
%
Financing & Holding Costs
 
$
5,320
 
 
 
1.47
%
Sourcing Fee(5)
 
$
10,640
 
 
 
2.95
%
Total Fees & Expenses
 
$
26,790
 
 
 
7.42
%
Total Proceeds
 
$
361,220
 
 
 
100.00
%
 
  1. Arrived Series Adams acquired the Arrived Series Adams property for $304,000 from an unaffiliated, third-party seller in accordance with one of the acquisition methods discussed above.
  2.  
  3. The manager plans for the Arrived Series Adams property to incur approximately $10,000 of costs related to certain renovation projects or capital expenditures related to our acquisition of the Arrived Series Adams property.
  4.  
  5. Estimated amount which includes but is not limited to legal fees associated with the purchase and sale agreement, title insurance, appraisal costs, closing costs, mortgage closing costs, and inspection costs.
  6.  
  7. We will reimburse the manager for offering expenses actually incurred for the Arrived Series Adams offering in an amount up to 2% of gross offering proceeds. Our manager will be responsible for any offering expenses above this amount.
  8.  
  9. We will pay the manager a sourcing fee for the costs involved in sourcing the property and preparing it for investment.
 
Acquisition Expenses, Operating Expenses and certain other costs that are advanced by the manager will be reimbursed out of the net proceeds of the Arrived Series Adams offering.  See “Management Compensation—Reimbursement of Expenses”
 
Arrived Series Adams, which will be offering its series interests pursuant to this offering circular, has completed the acquisition of, and payment for the Arrived Series Adams property using cash advanced by the manager. In exchange for the cash advanced by the manager, the series  has issued a promissory note to the manager in the amount of $332,400.
 
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The allocation of the net proceeds of this offering set forth above represents our intentions based upon our current plans and assumptions regarding industry and general economic conditions, our future revenues, if any, and expenditures.  The amounts and timing of our actual expenditures will depend upon numerous factors, including market conditions, cash generated by our operations, business developments, and the proceeds of the offering. The manager reserves the right to modify the use of proceeds based on the factors set forth above.   
 
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The total cost to acquire and improve the Arrived Series Bayne property, including applicable fees, expenses and reserves is $411,100.
 
We estimate that the gross proceeds of the offering of Arrived Series Bayne interests will be approximately $411,100, assuming the full amount of the offering is sold, and will be used in the following order of priority of payment:
 
                 
Uses
 
Amount
 
 
Percentage of Gross Proceeds
 
Acquisition of Property(1)
 
$
347,625
 
 
 
84.56
%
Property Improvements (2)
 
$
10,000
 
 
 
2.43
%
Operating & Capital Reserves
 
$
17,380
 
 
 
4.23
%
Brokerage Fee
 
$
4,111
 
 
 
1.00
%
Acquisition Expenses (3)
 
$
5,520
 
 
 
1.34
%
Offering Expenses(4)
 
$
8,222
 
 
 
2.00
%
Financing & Holding Costs
 
$
6,080
 
 
 
1.48
%
Sourcing Fee(5)
 
$
12,160
 
 
 
2.96
%
Total Fees & Expenses
 
$
30,570
 
 
 
7.44
%
Total Proceeds
 
$
411,100
 
 
 
100.00
%
 
  1. Arrived Series Bayne acquired the Arrived Series Bayne property for $347,625 from an unaffiliated, third-party seller in accordance with one of the acquisition methods discussed above.
  2.  
  3. The manager plans for the Arrived Series Bayne property to incur approximately $10,000 of costs related to certain renovation projects or capital expenditures related to our acquisition of the Arrived Series Bayne property.
  4.  
  5. Estimated amount which includes but is not limited to legal fees associated with the purchase and sale agreement, title insurance, appraisal costs, closing costs, mortgage closing costs, and inspection costs.
  6.  
  7. We will reimburse the manager for offering expenses actually incurred for the Arrived Series Bayne offering in an amount up to 2% of gross offering proceeds. Our manager will be responsible for any offering expenses above this amount.
  8.  
  9. We will pay the manager a sourcing fee for the costs involved in sourcing the property and preparing it for investment.
 
Acquisition Expenses, Operating Expenses and certain other costs that are advanced by the manager will be reimbursed out of the net proceeds of the Arrived Series Bayne offering.  See “Management Compensation—Reimbursement of Expenses”
 
Arrived Series Bayne, which will be offering its series interests pursuant to this offering circular, has completed the acquisition of, and payment for the Arrived Series Bayne property. In exchange for the cash advanced by the manager, the series  has issued a promissory note to the manager in the amount of $379,600.
 
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The allocation of the net proceeds of this offering set forth above represents our intentions based upon our current plans and assumptions regarding industry and general economic conditions, our future revenues, if any, and expenditures.  The amounts and timing of our actual expenditures will depend upon numerous factors, including market conditions, cash generated by our operations, business developments, and the proceeds of the offering. The manager reserves the right to modify the use of proceeds based on the factors set forth above.   
 
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The total cost to acquire and improve the Arrived Series Boxwood property, including applicable fees, expenses and reserves is $381,810.
 
We estimate that the gross proceeds of the offering of Arrived Series Boxwood interests will be approximately $381,810, assuming the full amount of the offering is sold, and will be used in the following order of priority of payment:
 
                 
Uses
 
Amount
 
 
Percentage of Gross Proceeds
 
Acquisition of Property(1)
 
$
322,505
 
 
 
84.47
%
Property Improvements (2)
 
$
10,000
 
 
 
2.62
%
Operating & Capital Reserves
 
$
16,120
 
 
 
4.22
%
Brokerage Fee
 
$
3,818
 
 
 
1.00
%
Acquisition Expenses (3)
 
$
4,810
 
 
 
1.26
%
Offering Expenses(4)
 
$
7,636
 
 
 
2.00
%
Financing & Holding Costs
 
$
5,640
 
 
 
1.48
%
Sourcing Fee(5)
 
$
11,280
 
 
 
2.95
%
Total Fees & Expenses
 
$
28,370
 
 
 
7.43
%
Total Proceeds
 
$
381,810
 
 
 
100.00
%
 
  1. Arrived Series Boxwood acquired the Arrived Series Boxwood property for $324,990 from an unaffiliated, third-party seller in accordance with one of the acquisition methods discussed above. Such purchase price is comprised of a seller credit in the amount of $2,486, with the remainder paid in cash.
  2.  
  3. The manager plans for the Arrived Series Boxwood property to incur approximately $10,000 of costs related to certain renovation projects or capital expenditures related to our acquisition of the Arrived Series Boxwood property.
  4.  
  5. Estimated amount which includes but is not limited to legal fees associated with the purchase and sale agreement, title insurance, appraisal costs, closing costs, mortgage closing costs, and inspection costs.
  6.  
  7. We will reimburse the manager for offering expenses actually incurred for the Arrived Series Boxwood offering in an amount up to 2% of gross offering proceeds. Our manager will be responsible for any offering expenses above this amount.
  8.  
  9. We will pay the manager a sourcing fee for the costs involved in sourcing the property and preparing it for investment.
 
Acquisition Expenses, Operating Expenses and certain other costs that are advanced by the manager will be reimbursed out of the net proceeds of the Arrived Series Boxwood offering.  See “Management Compensation—Reimbursement of Expenses”
 
Arrived Series Boxwood, which will be offering its series interests pursuant to this offering circular, has completed the acquisition of, and payment for the Arrived Series Boxwood property. In exchange for the cash advanced by the manager, the series  has issued a promissory note to the manager in the amount of $351,900.
 
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The allocation of the net proceeds of this offering set forth above represents our intentions based upon our current plans and assumptions regarding industry and general economic conditions, our future revenues, if any, and expenditures.  The amounts and timing of our actual expenditures will depend upon numerous factors, including market conditions, cash generated by our operations, business developments, and the proceeds of the offering. The manager reserves the right to modify the use of proceeds based on the factors set forth above.   
 
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The total cost to acquire and improve the Arrived Series Langley property, including applicable fees, expenses and reserves is $392,240.
 
We estimate that the gross proceeds of the offering of Arrived Series Langley interests will be approximately $392,240, assuming the full amount of the offering is sold, and will be used in the following order of priority of payment:
 
                 
Uses
 
Amount
 
 
Percentage of Gross Proceeds
 
Acquisition of Property(1)
 
$
330,000
 
 
 
84.13
%
Property Improvements (2)
 
$
10,000
 
 
 
2.55
%
Operating & Capital Reserves
 
$
16,500
 
 
 
4.21
%
Brokerage Fee
 
$
3,922
 
 
 
1.00
%
Acquisition Expenses (3)
 
$
6,650
 
 
 
1.70
%
Offering Expenses(4)
 
$
7,845
 
 
 
2.00
%
Financing & Holding Costs
 
$
5,770
 
 
 
1.47
%
Sourcing Fee(5)
 
$
11,550
 
 
 
2.94
%
Total Fees & Expenses
 
$
29,080
 
 
 
7.41
%
Total Proceeds
 
$
392,240
 
 
 
100.00
%
 
  1. Arrived Series Langley acquired the Arrived Series Langley property for $335,000 from an unaffiliated, third-party seller in accordance with one of the acquisition methods discussed above. Such purchase price is comprised of a seller credit in the amount of $5,000, with the remainder paid in cash.
  2.  
  3. The manager plans for the Arrived Series Langley property to incur approximately $10,000 of costs related to certain renovation projects or capital expenditures related to our acquisition of the Arrived Series Langley property.
  4.  
  5. Estimated amount which includes but is not limited to legal fees associated with the purchase and sale agreement, title insurance, appraisal costs, closing costs, mortgage closing costs, and inspection costs.
  6.  
  7. We will reimburse the manager for offering expenses actually incurred for the Arrived Series Langley offering in an amount up to 2% of gross offering proceeds. Our manager will be responsible for any offering expenses above this amount.
  8.  
  9. We will pay the manager a sourcing fee for the costs involved in sourcing the property and preparing it for investment.
 
Acquisition Expenses, Operating Expenses and certain other costs that are advanced by the manager will be reimbursed out of the net proceeds of the Arrived Series Langley offering.  See “Management Compensation—Reimbursement of Expenses”
 
Arrived Series Langley, which will be offering its series interests pursuant to this offering circular, has completed the acquisition of, and payment for the Arrived Series Langley property using cash advanced by the manager. In exchange for the cash advanced by the manager, the series  has issued a promissory note to the manager in the amount of $361,800.
 
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The allocation of the net proceeds of this offering set forth above represents our intentions based upon our current plans and assumptions regarding industry and general economic conditions, our future revenues, if any, and expenditures.  The amounts and timing of our actual expenditures will depend upon numerous factors, including market conditions, cash generated by our operations, business developments, and the proceeds of the offering. The manager reserves the right to modify the use of proceeds based on the factors set forth above.   
 
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The total cost to acquire and improve the Arrived Series Metallo property, including applicable fees, expenses and reserves is $349,080.
 
We estimate that the gross proceeds of the offering of Arrived Series Metallo interests will be approximately $349,080, assuming the full amount of the offering is sold, and will be used in the following order of priority of payment:
 
                 
Uses
 
Amount
 
 
Percentage of Gross Proceeds
 
Acquisition of Property(1)
 
$
294,000
 
 
 
84.22
%
Property Improvements (2)
 
$
10,000
 
 
 
2.86
%
Operating & Capital Reserves
 
$
14,700
 
 
 
4.21
%
Brokerage Fee
 
$
3,491
 
 
 
1.00
%
Acquisition Expenses (3)
 
$
4,470
 
 
 
1.28
%
Offering Expenses(4)
 
$
6,982
 
 
 
2.00
%
Financing & Holding Costs
 
$
5,140
 
 
 
1.47
%
Sourcing Fee(5)
 
$
10,290
 
 
 
2.95
%
Total Fees & Expenses
 
$
25,900
 
 
 
7.42
%
Total Proceeds
 
$
349,080
 
 
 
100.00
%
 
  1. Arrived Series Metallo will acquire the Arrived Series Metallo property for $299,000 from an unaffiliated, third-party seller in accordance with one of the acquisition methods discussed above. Such purchase price will be comprised of a seller credit in the amount of $5,000, with the remainder to be paid in cash.
  2.  
  3. The manager plans for the Arrived Series Metallo property to incur approximately $10,000 of costs related to certain renovation projects or capital expenditures related to our acquisition of the Arrived Series Metallo property.
  4.  
  5. Estimated amount which includes but is not limited to legal fees associated with the purchase and sale agreement, title insurance, appraisal costs, closing costs, mortgage closing costs, and inspection costs.
  6.  
  7. We will reimburse the manager for offering expenses actually incurred for the Arrived Series Metallo offering in an amount up to 2% of gross offering proceeds. Our manager will be responsible for any offering expenses above this amount.
  8.  
  9. We will pay the manager a sourcing fee for the costs involved in sourcing the property and preparing it for investment.
 
Acquisition Expenses, Operating Expenses and certain other costs that are advanced by the manager will be reimbursed out of the net proceeds of the Arrived Series Metallo offering.  See “Management Compensation—Reimbursement of Expenses”
 
Arrived Series Metallo, which will be offering its series interests pursuant to this offering circular, expects to complete the acquisition of, and payment for the Arrived Series Metallo property. In exchange for the cash advanced by the manager, the series  will issue a promissory note to the manager in the amount of $320,900.
 
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The allocation of the net proceeds of this offering set forth above represents our intentions based upon our current plans and assumptions regarding industry and general economic conditions, our future revenues, if any, and expenditures.  The amounts and timing of our actual expenditures will depend upon numerous factors, including market conditions, cash generated by our operations, business developments, and the proceeds of the offering. The manager reserves the right to modify the use of proceeds based on the factors set forth above.   
 
84

 
The total cost to acquire and improve the Arrived Series Misty property, including applicable fees, expenses and reserves is $408,140.
 
We estimate that the gross proceeds of the offering of Arrived Series Misty interests will be approximately $408,140, assuming the full amount of the offering is sold, and will be used in the following order of priority of payment:
 
                 
Uses
 
Amount
 
 
Percentage of Gross Proceeds
 
Acquisition of Property(1)
 
$
345,000
 
 
 
84.53
%
Property Improvements (2)
 
$
12,000
 
 
 
2.94
%
Operating & Capital Reserves
 
$
17,250
 
 
 
4.23
%
Brokerage Fee
 
$
4,081
 
 
 
1.00
%
Acquisition Expenses (3)
 
$
3,540
 
 
 
0.87
%
Offering Expenses(4)
 
$
8,163
 
 
 
2.00
%
Financing & Holding Costs
 
$
6,030
 
 
 
1.48
%
Sourcing Fee(5)
 
$
12,070
 
 
 
2.96
%
Total Fees & Expenses
 
$
30,340
 
 
 
7.43
%
Total Proceeds
 
$
408,140
 
 
 
100.00
%
 
  1. Arrived Series Misty acquired the Arrived Series Misty property for $345,000 from an unaffiliated, third-party seller in accordance with one of the acquisition methods discussed above.
  2.  
  3. The manager plans for the Arrived Series Misty property to incur approximately $12,000 of costs related to certain renovation projects or capital expenditures related to our acquisition of the Arrived Series Misty property.
  4.  
  5. Estimated amount which includes but is not limited to legal fees associated with the purchase and sale agreement, title insurance, appraisal costs, closing costs, mortgage closing costs, and inspection costs.
  6.  
  7. We will reimburse the manager for offering expenses actually incurred for the Arrived Series Misty offering in an amount up to 2% of gross offering proceeds. Our manager will be responsible for any offering expenses above this amount.
  8.  
  9. We will pay the manager a sourcing fee for the costs involved in sourcing the property and preparing it for investment.
 
Acquisition Expenses, Operating Expenses and certain other costs that are advanced by the manager will be reimbursed out of the net proceeds of the Arrived Series Misty offering.  See “Management Compensation—Reimbursement of Expenses”
 
Arrived Series Misty, which will be offering its series interests pursuant to this offering circular, has completed the acquisition of, and payment for the Arrived Series Misty property using cash advanced by the manager. In exchange for the cash advanced by the manager, the series  has issued a promissory note to the manager in the amount of $374,800.
 
85

The allocation of the net proceeds of this offering set forth above represents our intentions based upon our current plans and assumptions regarding industry and general economic conditions, our future revenues, if any, and expenditures.  The amounts and timing of our actual expenditures will depend upon numerous factors, including market conditions, cash generated by our operations, business developments, and the proceeds of the offering. The manager reserves the right to modify the use of proceeds based on the factors set forth above.   
 
86

 
 
The total cost to acquire and improve the Arrived Series Presidio property, including applicable fees, expenses and reserves is $287,060.
 
We estimate that the gross proceeds of the offering of Arrived Series Presidio interests will be approximately $287,060, assuming the full amount of the offering is sold, and will be used in the following order of priority of payment:
 
                 
Uses
 
Amount
 
 
Percentage of Gross Proceeds
 
Acquisition of Property(1)
 
$
242,000
 
 
 
84.30
%
Property Improvements (2)
 
$
8,000
 
 
 
2.79
%
Operating & Capital Reserves
 
$
12,100
 
 
 
4.22
%
Brokerage Fee
 
$
2,871
 
 
 
1.00
%
Acquisition Expenses (3)
 
$
3,640
 
 
 
1.27
%
Offering Expenses(4)
 
$
5,741
 
 
 
2.00
%
Financing & Holding Costs
 
$
4,230
 
 
 
1.47
%
Sourcing Fee(5)
 
$
8,470
 
 
 
2.95
%
Total Fees & Expenses
 
$
21,310
 
 
 
7.42
%
Total Proceeds
 
$
287,060
 
 
 
100.00
%
 
  1. Arrived Series Presidio acquired the Arrived Series Presidio property for $242,000 from an unaffiliated, third-party seller in accordance with one of the acquisition methods discussed above.
  2.  
  3. The manager plans for the Arrived Series Presidio property to incur approximately $8,000 of costs related to certain renovation projects or capital expenditures related to our acquisition of the Arrived Series Presidio property.
  4.  
  5. Estimated amount which includes but is not limited to legal fees associated with the purchase and sale agreement, title insurance, appraisal costs, closing costs, mortgage closing costs, and inspection costs.
  6.  
  7. We will reimburse the manager for offering expenses actually incurred for the Arrived Series Presidio offering in an amount up to 2% of gross offering proceeds. Our manager will be responsible for any offering expenses above this amount.
  8.  
  9. We will pay the manager a sourcing fee for the costs involved in sourcing the property and preparing it for investment.
 
Acquisition Expenses, Operating Expenses and certain other costs that are advanced by the manager will be reimbursed out of the net proceeds of the Arrived Series Presidio offering.  See “Management Compensation—Reimbursement of Expenses”
 
Arrived Series Presidio, which will be offering its series interests pursuant to this offering circular, has completed the acquisition of, and payment for the Arrived Series Presidio property using cash advanced by the manager. In exchange for the cash advanced by the manager, the series  has issued a promissory note to the manager in the amount of $264,100.
 
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The allocation of the net proceeds of this offering set forth above represents our intentions based upon our current plans and assumptions regarding industry and general economic conditions, our future revenues, if any, and expenditures.  The amounts and timing of our actual expenditures will depend upon numerous factors, including market conditions, cash generated by our operations, business developments, and the proceeds of the offering. The manager reserves the right to modify the use of proceeds based on the factors set forth above.   
 
88

 
 
The total cost to acquire and improve the Arrived Series Spangler property, including applicable fees, expenses and reserves is $454,410.
 
We estimate that the gross proceeds of the offering of Arrived Series Spangler interests will be approximately $454,410, assuming the full amount of the offering is sold, and will be used in the following order of priority of payment:
 
                 
Uses
 
Amount
 
 
Percentage of Gross Proceeds
 
Acquisition of Property(1)
 
$
382,000
 
 
 
84.07
%
Property Improvements (2)
 
$
15,000
 
 
 
3.30
%
Operating & Capital Reserves
 
$
19,100
 
 
 
4.20
%
Brokerage Fee
 
$
4,544
 
 
 
1.00
%
Acquisition Expenses (3)
 
$
4,620
 
 
 
1.02
%
Offering Expenses(4)
 
$
9,088
 
 
 
2.00
%
Financing & Holding Costs
 
$
6,680
 
 
 
1.47
%
Sourcing Fee(5)
 
$
13,370
 
 
 
2.94
%
Total Fees & Expenses
 
$
33,680
 
 
 
7.41
%
Total Proceeds
 
$
454,410
 
 
 
100.00
%
 
  1. Arrived Series Spangler acquired the Arrived Series Spangler property for $382,000 from an unaffiliated, third-party seller in accordance with one of the acquisition methods discussed above.
  2.  
  3. The manager plans for the Arrived Series Spangler property to incur approximately $15,000 of costs related to certain renovation projects or capital expenditures related to our acquisition of the Arrived Series Spangler property.
  4.  
  5. Estimated amount which includes but is not limited to legal fees associated with the purchase and sale agreement, title insurance, appraisal costs, closing costs, mortgage closing costs, and inspection costs.
  6.  
  7. We will reimburse the manager for offering expenses actually incurred for the Arrived Series Spangler offering in an amount up to 2% of gross offering proceeds. Our manager will be responsible for any offering expenses above this amount.
  8.  
  9. We will pay the manager a sourcing fee for the costs involved in sourcing the property and preparing it for investment.
 
Acquisition Expenses, Operating Expenses and certain other costs that are advanced by the manager will be reimbursed out of the net proceeds of the Arrived Series Spangler offering.  See “Management Compensation—Reimbursement of Expenses”
 
Arrived Series Spangler, which will be offering its series interests pursuant to this offering circular, has completed the acquisition of, and payment for the Arrived Series Spangler property using cash advanced by the manager. In exchange for the cash advanced by the manager, the series  has issued a promissory note to the manager in the amount of $415,800.
 
89

 
The allocation of the net proceeds of this offering set forth above represents our intentions based upon our current plans and assumptions regarding industry and general economic conditions, our future revenues, if any, and expenditures.  The amounts and timing of our actual expenditures will depend upon numerous factors, including market conditions, cash generated by our operations, business developments, and the proceeds of the offering. The manager reserves the right to modify the use of proceeds based on the factors set forth above.   
 
90

 
 
The total cost to acquire and improve the Arrived Series Tomlinson property, including applicable fees, expenses and reserves is $292,990.
 
We estimate that the gross proceeds of the offering of Arrived Series Tomlinson interests will be approximately $292,990, assuming the full amount of the offering is sold, and will be used in the following order of priority of payment:
 
                 
Uses
 
Amount
 
 
Percentage of Gross Proceeds
 
Acquisition of Property(1)
 
$
245,000
 
 
 
83.62
%
Property Improvements (2)
 
$
10,000
 
 
 
3.41
%
Operating & Capital Reserves
 
$
12,250
 
 
 
4.18
%
Brokerage Fee
 
$
2,930
 
 
 
1.00
%
Acquisition Expenses (3)
 
$
4,100
 
 
 
1.40
%
Offering Expenses(4)
 
$
5,860
 
 
 
2.00
%
Financing & Holding Costs
 
$
4,280
 
 
 
1.46
%
Sourcing Fee(5)
 
$
8,570
 
 
 
2.93
%
Total Fees & Expenses
 
$
21,630
 
 
 
7.38
%
Total Proceeds
 
$
292,990
 
 
 
100.00
%
 
  1. Arrived Series Tomlinson acquired the Arrived Series Tomlinson property for $245,000 from an unaffiliated, third-party seller in accordance with one of the acquisition methods discussed above.
  2.  
  3. The manager plans for the Arrived Series Tomlinson property to incur approximately $10,000 of costs related to certain renovation projects or capital expenditures related to our acquisition of the Arrived Series Tomlinson property.
  4.  
  5. Estimated amount which includes but is not limited to legal fees associated with the purchase and sale agreement, title insurance, appraisal costs, closing costs, mortgage closing costs, and inspection costs.
  6.  
  7. We will reimburse the manager for offering expenses actually incurred for the Arrived Series Tomlinson offering in an amount up to 2% of gross offering proceeds. Our manager will be responsible for any offering expenses above this amount.
  8.  
  9. We will pay the manager a sourcing fee for the costs involved in sourcing the property and preparing it for investment.
 
Acquisition Expenses, Operating Expenses and certain other costs that are advanced by the manager will be reimbursed out of the net proceeds of the Arrived Series Tomlinson offering.  See “Management Compensation—Reimbursement of Expenses”
 
Arrived Series Tomlinson, which will be offering its series interests pursuant to this offering circular, has completed the acquisition of, and payment for the Arrived Series Tomlinson property using cash advanced by the manager. In exchange for the cash advanced by the manager, the series  has issued a promissory note to the manager in the amount of $267,800.
 
91

The allocation of the net proceeds of this offering set forth above represents our intentions based upon our current plans and assumptions regarding industry and general economic conditions, our future revenues, if any, and expenditures.  The amounts and timing of our actual expenditures will depend upon numerous factors, including market conditions, cash generated by our operations, business developments, and the proceeds of the offering. The manager reserves the right to modify the use of proceeds based on the factors set forth above.   
 
92

 

MANAGEMENT

 

General

 

The manager of our company is Arrived Holdings, Inc., a Delaware corporation. The manager has established a board of directors for our company, consisting of two members, Ryan Frazier and Kenneth Cason.

 

The nature of our business to be conducted or promoted by us must at all times be to engage in any lawful act or activity for which LLCs may be organized under the Delaware Limited Liability Company Act.

 

All of our directors and executive officers are employees of the manager. The executive offices of the manager are located at 1700 Westlake Ave N, Suite 200, Seattle, WA 98109  and the telephone number of the manager’s executive offices is (814) 277-4833.

 

Executive Officers and Directors

 

The following table sets forth certain information with respect to each of the directors and executive officers of the manager:

 

Executive Officer   Age   Position Held with our Company(1) (2)   Position Held with the Manager
Ryan Frazier   36   Chief Executive Officer and Director   Chief Executive Officer, President and Director
Sue Korn   54   Chief Financial Officer   Chief Financial Officer
Kenneth Cason   37   Chief Technology Officer and Director   Chief Technology Officer and Director
Alejandro Chouza   43   Chief Operating Officer   Chief Operating Officer

 

(1) The terms in office of Mr. Frazier, Mr. Cason, and Mr. Chouza began upon the organization of our company on January 4, 2023. Ms. Korn's term in office began upon her appointment as CFO on January 11, 2024. The current executive officers and directors will serve in these capacities indefinitely, or until their successors are duly elected and qualified.

 

(2) The executive officers of the manager are currently devoting a significant amount of their working time to the operations of our company to satisfy their respective responsibilities to the management of our company. Our officers will be working on a part-time basis for our business and are expected to devote at least forty (40) hours per month to the operations and management of our company.

 

Biographical Information

 

Set forth below is biographical information of our executive officers and directors.

 

Ryan Frazier, our Chief Executive Officer and a director, has served as the Chief Executive Officer, President, and a director of Arrived Holdings, Inc. since its inception in February 2019 and as CEO and director of our company since its inception. In 2011, Mr. Frazier co-founded and was the CEO of DataRank, Inc., a social media listening platform used by Fortune 500 companies, including Procter & Gamble, Coca Cola, and The Clorox Company, to garner insights from their consumers. Mr. Frazier led DataRank through a merger with Simply Measured, Inc. in 2015, and again through a merger with Sprout Social, Inc. in 2017, after which he acted in the role of General Manager, leading the integration of the Simply Measured, Inc. and Sprout Social businesses in Sprout Social’s Seattle office. Mr. Frazier is an alumnus of Y Combinator, S13, and he graduated from the University of Arkansas in 2010 with a B.S. in International Business.

 

93

Sue Korn has served as the Chief Financial Officer of Arrived Holdings, Inc. since January 2024. Ms. Korn began her career in equity research for diversified financial services companies at Kidder, Peabody in 1992, later moving to investment banking in Salomon Smith Barney's Financial Institutions Group in 1997. She joined Providian Financial in 1998 where she oversaw planning and analysis, data management and reporting for a $33 billion credit card business. In 2011 she transitioned to FinTech, bringing her financial expertise to companies such as Prosper Marketplace (FP&A and back office operations), LendingClub (marketplace operations and treasury), and Oportun (FP&A and accounting) and was co-founder/CFO/Head of Operations for online lender Vouch Financial. Ms. Korn graduated from Colby College with a B.A. in Philosophy/Math in 1991 and earned her M.B.A from Kellogg Graduate School of Management at Northwestern University in 1997 with majors in Finance, Management and Strategy and Organizational Behavior. She has held the Chartered Financial Analyst® designation since 1998.

 

Kenneth Cason, our Chief Technology Officer and a director, has served as the Chief Technology Officer and director of Arrived Holdings, Inc. since its inception in February 2019. Beginning in 2011, Mr. Cason served as the Co-Founder and Chief Technology Officer of DataRank, Inc. Mr. Cason worked extensively to help design and build large scale data collection, processing, and search systems. He remained employed with DataRank through two mergers; first with Simply Measured, Inc., in 2015, and then again with Sprout Social in 2017. During both mergers he worked to lead and integrate each company’s tech stack. Mr. Cason is an alumni of Y Combinator, S13, and he graduated from the University of Arkansas in 2010 with a B.S. in Computer Science and also received Associate degrees in Mathematics, Japanese and Chinese.

 

Alejandro Chouza, our Chief Operating Officer, has served as the Chief Operating Officer of Arrived Holdings, Inc. since its inception in February 2019. Mr. Chouza was previously the VP of Operations of Oyo Rooms beginning in May 2019. Prior to that, Mr. Chouza was the Regional General Manager of Uber Technologies, Inc., from September 2014 through May 2019, where he launched and managed operations in Mexico and the Northwest USA markets. Mr. Chouza graduated with a B.S. from Babson College and an M.B.A. from The Wharton School of the University of Pennsylvania.

 

There are no arrangements or understandings known to us pursuant to which any director was or is to be selected as a director or nominee. There are no agreements or understandings for any executive officer or director to resign at the request of another person and no officer or director is acting on behalf of nor will any of them act at the direction of any other person.

 

There are no family relationships between any director, executive officer, person nominated or chosen to become a director or executive officer or any significant employee.

 

The Manager and the Operating Agreement

 

The manager will be responsible for directing the management of our business and affairs, managing our day-to-day affairs, and implementing our investment strategy. The manager and its officers will not be required to devote all of their time to our business and are only required to devote such time to our affairs as their duties require.

 

The manager will perform its duties and responsibilities pursuant to the operating agreement. The manager will maintain a contractual, as opposed to a fiduciary relationship, with us and our investors. Furthermore, we have agreed to limit the liability of the manager and to indemnify the manager against certain liabilities.

 

The operating agreement further provides that our manager, in exercising its rights in its capacity as the managing member, will be entitled to consider only such interests and factors as it desires, including its own interests, and will have no duty or obligation (fiduciary or otherwise) to give any consideration to any interest of or factors affecting our company, any series of interests or any of the interest holders and will not be subject to any different standards imposed by the operating agreement, the LLC Act or under any other law, rule or regulation or in equity.  In addition, the operating agreement provides that our manager will not have any duty (including any fiduciary duty) to our company, any series or any of the interest holders.

 

94

Our manager has not-sponsored any prior real estate investment programs. Accordingly, this offering circular does not contain any information concerning prior performance of our manager and its affiliates, which means that you will be unable to assess any results from their prior activities before deciding whether to purchase interests in our series.

 

Responsibilities of the Manager 

 

The responsibilities of the manager include:

 

  Investment Advisory, Origination and Acquisition Services such as approving and overseeing our overall investment strategy, which will consist of elements such as investment selection criteria, diversification strategies and asset disposition strategies;

 

  Offering Services such as the development of our series offerings, including the determination of their specific terms;

 

  Management Services such as investigating, selecting, and, on our behalf, engaging and conducting business with such persons as the manager deems necessary to the proper performance of its obligations under the operating agreement, including but not limited to consultants, accountants, lenders, technical managers, attorneys, corporate fiduciaries, escrow agents, depositaries, custodians, agents for collection, insurers, insurance agents, developers, construction companies, property managers and any and all persons acting in any other capacity deemed by the manager necessary or desirable for the performance of any of the services under the operating agreement;

 

  Accounting and Other Administrative Services such as maintaining accounting data and any other information concerning our activities as will be required to prepare and to file all periodic financial reports and returns required to be filed with the Commission and any other regulatory agency, including annual financial statements, and managing and performing the various administrative functions necessary for our day-to-day operations;

 

  Investor Services such as managing communications with our investors, including answering phone calls, preparing and sending written and electronic reports and other communications;

 

  Financing Services such as monitoring and overseeing the service of our debt facilities and other financings, if any; and