Ark7 Review: Invest in Rental Homes

Investing in real estate takes on several forms, not just rental homes. However, if you want to get into the rental real estate market, there are many ways to do so. You have the option of purchasing and renting out a property on your own or investing with a company that takes care of all the minor details. Deciding between even those companies can require a bit of research and insider knowledge. 

These are the reasons why we’ve put together this guide on Ark7. This company allows you to invest in rental homes, in a different way than you may be used to. In contrast to other rental property brokers, Ark7 offers a unique opportunity to earn passive income from a rental property without contributing to a fund. This can open the door to increased profits as well as a reduction of overall risk.

Knowing which rental real estate opportunities are available can help you make a better decision about your investments. Comparing them is often the best way to find out which will benefit you most and what terms you can take advantage of. At the end of this article, we’ll compare Ark7 to other popular real estate investment opportunities so you can make the best decision for your situation. 

Are you ready to see how Ark7 can help you invest in rental homes? Let’s get started!

What is Ark7

Founded in 2018, Ark7 is a fractional real estate company. Open to both accredited and non-accredited investors, this platform allows investors to buy shares of rental properties currently generating income. These properties include both single and multi-family dwellings across the country. This can help you take advantage of the real estate market in various areas without worrying about multiple investments in one area suffering equally. 

In contrast to REITs and crowdfunding platforms, Ark7 provides a direct link between investors and properties. Companies you invest with can go under if the real estate market falls out, leaving you wanting. However, the ability to get closer to ownership can help you make up your investment if this were ever to happen with companies like Ark7. Debtors would still be first in line, but you would have a greater chance of recouping your losses.

As of November 2022, Ark7 has already distributed over $1 million to approximately 18,000+ investors. This fully passive rental investment platform takes care of all the necessary details when it comes to these properties. In fact, Ark7 puts potential investment properties through a stringent process before adding them to the larger portfolio. Most properties on the website (there are 18 total) are located within high-growth markets to provide the best profit opportunities.

When you invest in rental real estate with Ark7, you’re investing directly in the property itself. This means you have greater control over the properties you choose to invest in, as you’re not contributing to a fund. Instead of actively managing the property, you’re a passive shareholder. You don’t have to worry about Upkeep or day-to-day repairs; Ark7 will take care of those details for you by either contracting with a third-party company or completing the work themselves.

Features

Ark7 is best for investors looking to have greater say in their own real estate portfolios. It can also be a way for beginners to invest in real estate without breaking their investment budget. 

There are low minimum investment thresholds and yet you can expect an average annual return rate of 5.04%. Some returns even peak at above 6%, rivaling any high-yield savings account rate of return numbers.  

However, Ark7 does require that you hold your shares for at least one year before you redeem them without penalty. 

Investors are free to sell their shares after a minimum holding period of 1 year, or shorter if specified, through the secondary market. It can be accessed directly from the marketplace. Properties that have been fully funded during the initial offering will be introduced to the secondary market in phases.

Fees 

Ark7 has to make money, so they do charge a few fees along the way. You’ll pay a one-time 3% sourcing fee used to offset the cost of acquiring and listing properties. In addition, anywhere from 8% to 15% of the rental income goes towards property management, depending on what the property needs, where it’s located, etc.

There are is no commission to be paid when you buy and sell shares. You can also download the mobile app for free and start investing for as little as $20.

Listings

Within the Ark7 network, listings will include a variety of information, such as: 

• Share price
• Monthly rent amount
• Cash distributions
• Total target return
• Property information (build year, occupancy status, square footage, number of units, etc.)
• Neighborhood information  
• Financial summary of income and expenses
• Use of proceeds

Most investors use the information within the listing to determine whether or not the property is worth investing in. Investors may also invest more in a property they feel will gain value, or spread their investments across several properties to hedge against any losses. 

How Does Investing with Ark7 Work?

The process Ark7 uses to invest in rental properties may seem straightforward, but that’s not to say the company doesn’t do its due diligence. In fact, Ark7 has created a streamlined property evaluation process designed to identify and purchase high-yield investment properties. 

The process begins with acquiring properties with strategy in mind. In action, this means Ark7 identifies those properties that are undervalued but located in high-yield markets. In layman’s terms, this means the property has potential for growth in an area that’s seeing growth or will see growth in the near future. 

Once properties are identified and purchased, they are then renovated and split up into fractional shares. These shares are then put up for sale on the Ark7 website, where investors like you can participate in the process. Ark7 continues to foster the property by handling daily tasks, such as finding and qualifying tenants, managing the property, and maintaining it throughout the seasons. 

Ark7 Pros and Cons 

There are many benefits to investing with Ark7, among them: 

• Low minimum investment thresholds 
• Monthly passive cash distributions 
• Viable real estate side hustle for investors of all ages and budgets
• Learn about properties before you invest  
• Choose which properties you want to invest in 
• Protection from litigation through Ark7’s LLC status 
• Financial-level data encryption 
• Open to both accredited and non-accredited investors 
• No commissions 
• Investment in a stable asset 
• Free account 
• Readily available due diligence documentation 

Did you know that Ark7 itself also invests in these companies? This gives the company a vested interest in making good on your investment. 

At the same time, Ark7 does lack the following: 

• New company with a short track record
• No REIT or commercial real estate opportunities 
• Property appreciation is on the horizon but still far away 
• Sourcing fees can be higher than alternatives

Potential investors should weigh these pros and cons when considering whether or not to invest in Ark7 rental properties. You should also determine how these investments fit with your goals and risk appetite as well. 

How to Create an Ark7 Account

Creating an account with Ark7 is easy. Simply use your email or Google account to sign up. You can work off the desktop version or even download the Ark7 mobile app for investing on the go. It’s free to sign up and you can get started with only $20. 

Buying Shares

You can peruse the listings on Ark7 without making a single investment. However, if you do end up choosing to invest, you’ll have to link your checking account. Then, you’ll navigate to the property you want to invest in and choose the number of shares you want to purchase. In most cases, shares cost anywhere from $20 to $100, though there are certainly exceptions. 

As we mentioned previously, investors see roughly 6% in returns from these investments. While you can’t automatically reinvest your earnings, this is something Ark7 is working towards. However, you can also purchase more shares once you receive your distribution and reinvest your earnings manually if you like. 

In addition, Ark7 works with Millenium Trust Company to offer investors the chance to open a traditional IRA or Roth IRA. 

Alternative Ways to Invest in Real Estate

Ark7 joins several real estate investment platforms already helping investors to benefit from the real estate market. You may have heard of some of them, including: 

• Fundrise: This crowdfunding platform offers commission-free trades and is one of the more popular ways to invest in real estate. There’s also a secondary market for Fundrise shares, which require a $10 minimum investment. 
• First National: Accredited investors can invest in several opportunities with First National, though there is a high minimum investment amount.  
• EquityMultiple: Minimum investment thresholds range from $5,000 to $10,000 on this platform, but you’ll have the opportunity to invest in both properties and other options as well. 
• AcreTrader: Invest in farmland with AcreTrader for annual returns of 11%. 
• FarmTogether: You can invest in farmland to earn via rental income or land appreciation with FarmTogether.
• Arrived Homes: As long as you have $100, you can start investing with Arrived Homes. 
• Landa: You’ll only need $5 to invest in real estate with Landa. 
• CrowdStreet: Though this platform requires a higher minimum investment, there are more opportunities to invest. 
• RealtyMogul: Investing on this platform will require a higher initial investment as well, but you’ll gain a wider selection of investment opportunities to go along with it.

Most of these opportunities allow you to invest in real estate through REITs or crowdfunding. Again, you should consider which approach best fits your style and risk appetite. It’s also important to compare the pros and cons of each platform you’re considering in addition to reading the fine print regarding how long your investment will be tied up. You may want to trade a lower rate of return for the flexibility of liquidation, or vice versa. 

FAQs

Diversify with Rental Home Investments 

We hope you’ve found this article on investing with Ark7 helpful in determining if it’s a great fit for you or not. There are plenty of rental investment opportunities out there, but not all of them will fit your investment style. Ark7 can offer you some of the best features in the marketplace for investing in rental real estate, especially when it comes to investing directly in a rental property. Once you’ve invested with Ark7, it’s simply a question of your next investment. Where will investing with Ark7 take you?