New Platform Deep-Dive Review: Ark7 Single-family Home Rental Platform
This newcomer to The Review offers deals in the desirable but often-difficult-to-access class of single-family rentals. It has impressive deal volume and a number of unique innovations including no-debt offerings, ultra-low $100 minimums and the ability to trade/sell investments. Downsides for some investors includes current lack of disclosure of the full track record and co-investment by principals, as well as use of series LLCs.
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A Changing of the Guard for Real Estate CrowdFunding?
Downturns typically do one of two things to a young industry: Either:
The leads of the top one or two companies become cemented (as the smaller ones go out of business). And these leaders emerge far further ahead and more dominant than ever.
....OR the leaders crack (through miscalculations and/or mistakes). And this often opens up the door for brand-new companies to enter the market with better and more innovative solutions, which can take the industry in a new direction.
Several years ago I assumed that real estate crowdfunding would be in the first situation when the next real-estate downturn hit. And I believed that CrowdStreet (which was the dominant leader, by far) was going to grab virtually all the business and cement an insurmountable lead (as the most of the others were choked out). And I never imagined that investor-claimed satisfaction with CrowdStreet would tumble through the floor.
In the meantime, I've been noticing a trend of brand new companies popping up like daisies after a spring rain. And many of them are taking a different take on things and/or doing things differently than than the old guard.
So this is the second article in a new series about these new platforms. And this one is about Ark7 , which specializes in residential equity (i.e. single-family rentals).
Loving Single Family Rentals
In the groundbreaking study, "The Rate of Return of Everything", residential real estate's long-term performance (1870 - modern era) walloped virtually every other asset class.
It absolutely destroyed bonds and treasuries. And to the surprise of many, it did about as well as the stock market did. And when investing, the after-tax return is what matters the most. But, the study didn't look at taxes (and how real estate often enjoys many tax breaks that stocks don't). So after factoring that in, residential real estate almost certainly beat the stock market, too.
So I personally love the single-family rental asset-class. And it's the bedrock of my core portfolio.
But, there just aren't a lot of residential equity funds available. So it can be very difficult to access this asset class as a passive investment. And many investors are forced to own this kind of real estate directly (if they want in their portfolio).
And so when I saw Ark7 I was immediately intrigued.
No debt
And, many of the Ark7 deals have no debt, which is very unusual and hard to obtain in this asset class. So, as a conservative investor, this is a doubly-amazing thing. On the other hand, a more aggressive investor might find the no debt offerings too "boring", and prefer only the Ark7 deals with debt.
More Ark7 Features
For a newcomer to the Review, Ark7 has an impressively large number of open deals (currently 11).And, the offerings span a surprisingly large number of cities across the US (for a newer platform to the Review). This makes them large enough to be an immediate contender for an investor's potential portfolio.
Their individual deals (called Ark7) are conveniently open to all investors (meaning nonaccredited too) who are in the U.S. and 18+ years old. Their fund (called Ark7+) is for accredited investors only.
Minimum investment requirements are exceptionally low at just $100. This is a nice change versus the usual $25k - $50k minimums.
Additionally Ark7 has a unique trading platform (that currently shows 23). This gives the investor the potential to exit when they want to.
On the downside, the Arc 7 deals are structured as a series LLC. Also, co-investment by principals does not seem to be disclosed on each deal. And Ark7 is a relatively new company that does not appear to currently disclose their complete track record. If Ark7 were somehow not around then presumably there would be no way to trade and/or exit.
This new review has more info on how Ark7 works, its pros and cons and also a due-diligence deep-dive on a current Ark7 deal. Click here to see the full Ark7 review.
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