There’s a website-based platform in town that lets you invest in fractional shares of actual real estate. Although we’re not too surprised it came along because we called it back in 2019, it’s still pretty cool.
Similar to how the investing mobile app Robinhood works, Ark7 is a full-service real estate investment platform where you can buy, hold, and sell fractional shares of real estate properties. Based in San Francisco, California, the company invests in individual properties and then offers investors the chance to invest in the properties they like.
You first set up an account with Ark7. After you join, you can view detailed reports, photos of the properties, legal documents, reviews, etc. Each listing on there has already been completely vetted by the company. “Price, location, capitalization rate, appreciation value, and property condition” are all thoroughly researched. And, only those most likely to appreciate make it through.
From their hand-selected properties, you can customize your portfolio by picking and choosing which preferred properties you’d like to invest in. When you’re ready to call it quits on a property, you can sell your shares to others.
Ark7 also offers a hands-off investment platform. This means the company manages the properties for you, which includes handling all leasing, financing, legal, and reporting responsibilities. And, the holding company distributes dividends to investors each month.
Ark7 vs Private Equity Funds/REITs
Unlike private equity funds, Ark7 doesn’t have a required minimum investment amount. Instead of having to shell out thousands of dollars, for as low as $5.40/share, you can invest in a property. So, if things go wrong, any potential loss is minimal. However, Ark7 won’t give you the higher return rates a private equity fund will.
With Ark7, you can customize your portfolio, which is something a traditional Real Estate Investment Trust (REIT) doesn’t do. According to the company, its investments offer higher income than publicly-traded REITs.
On the other hand, when you’re ready to sell through a REIT, you know the dollar amount coming your way. With Ark7, at least with their Berkeley properties, the company will “buy back your investment at 95% of what you paid for it within the first 12 months” of ownership. After 12 months and up until 24 months, the company will buy the share back at 100%.
Also, private REITs can be difficult to cash out because they are illiquid. With Ark7, this isn’t a problem. Shares you want to sell can be sold back directly to the company for cash.
Overall, Ark7 makes investing in real estate approachable and less intimidating. And, it seems like it’s a good place to start for a novice.
“Ark7’s investing model is especially a good way for beginners to dip their toes into real estate investing without having to risk a large amount of time or money buying and managing a property by themselves,” wrote Co-founder and CMO of Ark7 Meng XU. So if you’re just starting out in real estate investment, Ark7 may be a good jumping-off point.