Fractional REI: Secondary Markets?

Question

Fractional REI companies (Roofstock, Arrived, etc) have caught my attention. What happens if I want to sell my shares? I'm concerned this is like trying to unload a timeshare where you get pennies on the dollar.

Arrived talked about a starting a secondary market for buying/selling shares. Are companies where they have a secondary market up and running? I'd love to see some secondary market pricing vs. buying directly from the company offering the shares.

Chris Seveney · Answer

@Jeff Lawlor

Thats another reason they won’t sell on a secondary - if they do another offering and they have an old offering on the secondary market selling at a discount, then they won’t be able to raise additional capital.

Also it’s not guaranteed it would sell at a discount it depends on the NAV

Jeff Lawlor · Answer

Thanks, @Chris Seveney.

I was expecting shares to sell at a discount in secondary markets, not a premium. Just thinking of the timeshare scenario.

Ideally, I would hold the shares to maturity. I just want to consider all my exit strategies before I invest.

Chris Seveney · Answer

@Jeff Lawlor

I don’t believe a secondary market exists for these shares. Most have a lockup period of x years before they will redeem the shares back from you.

It’s rare that a regulation a+ offering will list on a secondary market because they are constantly seelling their shares and do not hit their max, so no real market to pay a premium for them